The growing demand for larger and smaller monetary units

A thousand years ago we never needed to measure lengths of more than a few hundred leagues nor less than a few hairs. Now we measure the diameter of our local galactic supercluster in yotameters and the length of neutrinos in yoctometers.

A similar dynamic exists in the measurement of prices. When I was doing research last week for this post, I ran into my first instance of something measuring in the quadrillion dollar range. Apparently the Depository Trust & Clearing Corporation (DTCC) settled some $1.669 quadrillion in securities transactions in 2011. I'm still having problems getting a grasp on the size of that number. I doubt a banker in 1500s London would have ever had to conceive of anything more than a few hundred thousand shillings.

When the Fed's balance sheet exploded in 2009, we all had to get used to thinking in terms of trillions of dollars. But anyone analyzing the Fed in, say, the 1960s never had to worry about a balance sheet worth more than a mere $80 billion. I suppose that we all need to start getting used to quadrillions now, and whatever unit comes after that.

This goes the other direction, too. In financial markets, we're starting to see stock quotes in sub-penny amounts. This is a massive change from a few decades ago when stock was typically quoted in eighths of a dollar.

Cryptocurrencies like bitcoin are particularly interesting in this respect because they are divisible to 8 decimal places. I found myself in a novel place last week when I was offering to sell a bitcoin-denominated stock for 2.99999, and someone undercut me by offering 2.99998. Consider the cryptocurrency used by the Ripple system, the XRP. One millionth of an XRP is called a "drop". The default transaction fee on a Ripple trade is 10 drops. Given that an XRP is worth around 1/50,000th of one US dollar, it becomes very difficult to comprehend the tiny value of the 10 drop transaction fee.

One wonders how much larger and smaller our monetary units will be a thousand years from now.

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