Why Fix Something That Isn't Broken?
Bitcoin's fixed supply of 21 million is more than a technical feature; it is a cornerstone of its identity, a symbol of scarcity and monetary soundness that has captivated users and investors for over a decade. However, BIP 21Q a recent proposal to redefine Bitcoin's smallest unit-commonly called a "satoshi" or "sat"- as a "bitcoin", threatens to disrupt this balance.
While the proposal, authored by John Carvalho, aims to simplify Bitcoin's user experience by removing decimals inn daily transactions, it raises concerns about its impact on the ecosystem 's culture, perception, and functionality. Here's why Bitcoin doesn't need this change.
Preserving Bitcoins Legacy
The "21 million" cap is not just a fact embedded into the Bitcoin protocol; its a narrative that has anchored Bitcoins appeal to users worldwide. This fixed supply, framed as 21 million divisible units, has fostered trust, driven adoption, and underscored Bitcoin's scarcity of inflationary currencies.
BIP 21Q would redefine this framing, shifting the focus to a staggering 2.1 quadrillion "bitcoins." While technically accurate, such a shift risks diluting Bitcoin's identity as a scarce asset and alienating users who have internalised its current denomination.
User Confusion And Adoption
Changing the denomination from BTC to a smaller unit would create confusion for both existing and new users. Current Bitcoin holders would find their balances expressed in a denomination they didn't buy into, which could lead to misunderstandings and mistrust. Furthermore, financial reporting and accounting practice frameworks built around the current unit would require updates adding further complexities-this isn't fiat-we don't need this ecosystem to be more intimidating than it currently is for no coiners.
For new users, decimals may seem intimidating at first, but they are not insurmountable barriers. In fact, decimals are already a universal part of everyday life-from dollars and cents to kilograms and grams. Wallet providers and educators can focus on easing this learning curve rather than fundamentally altering Bitcoin's denomination.
The Inflationary Perception Problem
Redefining Bitcoin to emphasize 2.1 quadrillion units risks creating an inflationary perception. We already live in a world where financial assets are often judged by their unit price, this could undermine Bitcoins image as a scarce and deflationary. Potential users might misconstrue the abundance of "bitcoins" as a dilution of value.
Past Experiences
The Bitcoin ecosystem has already experimented with alternative such as mBTC (millibitcoin) and µBTC (microbitcoin). These denominations aimed to make Bitcoin more accessible but failed to gain widespread adoption. This suggests that the issue lies not in the units themselves but in user education and wallet design.
The terms "sats", meanwhile, has gained organic traction within the community as a colloquial and culturally fitting unit. Rather than upending this progress, efforts should focus on reinforcing sats as the standard for small transactions.
Risks of Fragmentation
Adopting BIP 21Q would require consensus across wallets, exchanges, and merchants, but Bitcoin thrives on decentralised agreement. A fragmented approach to implementing this change would confuse users and create interoperability issues, hindering Bitcoin's usability and adoption.
Practical Alternatives
Instead of redefining Bitcoin's unit, the ecosystem should focus on enhancing user experience through:
Education: Helping users to understand the concept of sats and decimals in Bitcoin transactions.
Interface Improvements: Designing Wallet interfaces that default to sats for small transactions, while allowing users to toggle between units.
Cultural Embrace for Sats: Promoting Sats as the everyday unit of Bitcoin commerce, celebrating its nod to Bitcoins pseudonymous creator, Satoshi Nakamoto.
In reality this means changing not much at all, because the practical alternatives mentioned above are practices already being naturally embraced by the culture. Why fix something that isn't broken?
