What stops you from buying coffee with Bitcoin?
Everyone is talking about Bitcoin mass adoption and amazing opportunities blockchain technology opens to us, but have you ever thought of BTC payments in everyday life? No? We wonder why!
Bitcoin was created by the anonymous programmer Satoshi Nakamoto as the electronic peer-to-peer cash system in 2008. 12 years passed, cryptocurrency has been developed by the community of miners and early adopters, but still didn’t mature enough to find its use case in real every day. There are disputes about wether Bitcoin is money or not. Some consider it’s to be, some see a store of value in it. Cryptocurrency proved to be a means of exchange long time ago, while Bitcoin currently seen as a short-term speculative investment tool or a long-term growth asset, but why doesn’t it look like money? There are several factors that explain this.
Just like dollars and cents, Bitcoin also has a smaller unit – Satoshi. The crypto protocol supports eight decimal places. 1 Bitcoin contains 100 million Satoshis, in other words 0.00000001 Bitcoin is called Satoshi.
It’s easy to understand, but turns to be difficult to apply for real life purchases, especially keeping in mind conversion to the US dollar and drastic market volatility. Paul de Havilland gives the following example. Imagine, you want to buy a cup of coffee worth $5.00. Assuming that the Bitcoin price is $7,000 you need to pay either 0.00071428571 Bitcoin or 71,420 Satoshis.
The Whole Number Bias Theory, “humans have great difficulty comparing quotients including fractions, proportions, and probabilities and often erroneously isolate the whole numbers of the numerators and denominators to compare them.” To put it simple, it’s problematic for the human brain to understand $5 as ₿0.00071428571.
Previously, there were attempts to simplify the Bitcoin’s denomination system to improve user experience. The uBTC, mBTC, cBTC schema is the most commonly referred to alternative value representation system. One uBTC (you-bit or microbitcoin) is 100 Satoshis, or 0.000001 BTC. One mBTC (em-bit or millibitcoin) is equal to 100,000 Satoshis, or 0.001 BTC. And one cBTC (bitcent), represents a million Satoshis, or 0.01 BTC. The most close dollar-equivalence is currently 10,000 Satoshi – the unit that doesn’t have a name.
Assuming a Bitcoin price of $7,000, the same $5.00 cup of coffee is worth:
7.142 (not denominated)
And that’s only if the price is stable. As Bitcoin is historically volatile asset, a very realistic scenario is for the $5 cup of coffee cost both $4 and $6 within a day! Though Laszlo Hanyecz gladly bought two pizzas for 10,000 BTC 10 years ago, buying a cup of coffee for 0.00071428571 Bitcoin doesn’t seem to be a good solution for the nearest future.
The crypto terminology is facing problems with denomination and volatility, which is calling for a measurement protocol that’s easy to process in every day crypto life. With a lot of confusion in real life Bitcoin use case, experts predict that the future for digital currencies will primarily stay for online payments.