$ 0.00004893 Coin Highlights Crypto’s Wild Decimal Frontier
(Bloomberg) – When it comes to decimals, cryptocurrencies are venturing into strange territory that other markets have never dared – or bothered, really – to go before.
Shiba Inu only cost around $ 0.00004893 each on Friday afternoon, while Dogecoin returned less than 1 cent at the start of the year. A Bitcoin can be cut into satoshi, which is this part of the coin: 0.00000001. And then there is the strangest of all: the wei. It is a quintillionth of ether, or 0.000000000000000000001.
The likely explanations for this are a mixture of understandable and confusing.
Retail traders love penny stocks. It’s easy to dream of huge returns when going from 1 cent to 2 cents doubles your money. So going even smaller than that relies on long-standing ponytails, even though Shiba Ibu and Dogecoin don’t bring much else to the table. And who doesn’t want to buy a million something? With Shiba Inu, it only costs around $ 50.
“You see with a lot of these coins, such as Doge and Shiba, retail investors are putting money into them because they look cheap,” said Halsey Minor, executive chairman of Public Mint, a blockchain platform. “There is a psychological element here, in many cases, where people think, ‘Oh, a whole Bitcoin costs $ 65,000, but a Dogecoin costs only 25 cents. “”
But the rationale for these tiny shards of Bitcoin, Ether, or Ether cousins (smart contracts using the ERC20 standard that also live on the Ethereum blockchain) is harder to explain – besides the fact that they carry the name of the pioneers of cryptography. The namesake of the satoshi is, of course, the creator of Bitcoin, Satoshi Nakamoto. Wei refers to the influential cryptographer Wei Dai.
Why the hell would anyone need to divide a token up to 18 decimal places? Well, there aren’t a lot of compelling reasons. Although, theoretically, a token could grow so much in value that all of those decimal places could come in handy. In theory, at least.
“Many researchers in space have agreed that the 18-decimal standard for ERC20 tokens is quite arbitrary and probably not ideal – 18 decimal places is A LOT of precision for just about any use case,” said Arjun Bhuptani, co-founder and project manager of Connext, which is what is called an interoperability network that enables communication between Ethereum compatible blockchains.
The problem is, while numbers can grow ad infinitum or be divided ad infinitum, computer hardware has finite limits on how much data can be stored. Thus, some platforms and tokens have chosen to break with the standard of 18 decimal places. For example, the Tether stablecoin – known as USDT – is an ERC20 token but only uses six decimal places. Even that is a lot for a coin that’s supposed to be worth almost exactly $ 1.
“The trade-off that token makers typically take into account when doing this is whether improving the user experience outweighs the extra work that would need to be done for other projects and applications to integrate it. “said Bhuptani.
The result is what’s known as decimal precision – or how far to the right of the decimal point different rigs are willing to go. For example, at Kraken there are limits on the number of numbers that can be entered during a transaction. Given its high price, the exchange has removed pennies when it comes to buying Bitcoin – orders can only be placed in dime increments. And when it comes to placing an order for a certain token amount, forget about the standard 18 decimal places for Ethereum-based tokens: you only get 8 on Kraken and many other platforms.
As Kraken explains on its website: “Lower price accuracy can help order books run more efficiently by reducing the volume of canceled (un-executed) orders as traders continually jump in front of each other by. small price fractions. “
When it comes to coins like Shiba Inu, Dogecoin, and SafeMoon – which currently cost around $ 0.00000348 – that’s usually a ridiculously large number to the left of the comma when it comes to providing, which helps create the ridiculously small number on the right when it comes to pricing. Shiba Inu started with an offer of 1 quadrillion. In other words: 1,000,000,000,000,000.
Although half of that was donated to Ethereum co-founder Vitalik Buterin, who “burned” most of it by sending it to a wallet that no one can access, there were still around 500 trillion coins left. .
So in the very unlikely event that the coin’s value increases to $ 1, the amount in circulation would be worth almost 10 times as much as the entire US stock market. Retail traders probably don’t think how unlikely that is, said Jonathan Azeroual, vice president of blockchain asset strategy on the crypto exchange platform INX.
“Decimalization on Dogecoin and on Shiba was actually the best marketing thing you could do, basically because nobody wants to buy 0.01 Bitcoin, but everyone wants to have millions of Shiba,” Azeroual said. “Why? Because they think somehow someday maybe this thing will go to $ 1.”
This psychological effect is why some in the crypto community advocate quoting satoshis prices, rather than a full Bitcoin. For what it’s worth, when Bitcoin is worth $ 65,000, a satoshi costs $ 0.000065, which is more than 10 times the cost of a Shiba Inu.
INX also allows only eight decimal places for the subdivisions of a room. It is even a lot. Starting in sixth place, you’re already dealing with a fraction of aether that’s worth less than a dime and deep in territory known as “dust” – chip shards so small they can get stuck. in wallets because they don’t have enough value to cover transaction costs.
Of course, the crypto world is famous for making plausible what once seemed implausible and vice versa. Azeroual recalls the uplifting tales of years past when people spent massive amounts of Bitcoin or Ethereum as payment just because they could. Like the guy who spent 10,000 Bitcoins – current value, almost $ 600 million – on two pizzas in 2010. Nowadays in some stores you can get something like 10,000 pizzas for one Bitcoin.
“And that’s what the exchanges are all about, ultimately what the price will be 10 years from now,” he said. “Who knows? Right?”
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