[psychboo]

When the whitepaper and subsequent code for the Bitcoin system was drafted, they created a set limit of 21 million bitcoins. After this limit is reached (designed to happen in 2140) there will be no new coins introduced into the network.

The concern then, is that when there is a fixed amount of coins available, people will begin to hoard them because they will appreciate in value. The system avoids this by allowing coins to be subdivided to 8 decimal places (the smallest unit is called a Satoshi). This results in 21 * 10^48 possible Satoshis available to the economy. It is expected that this will be a sufficient amount of currency for the network to avoid hoarding. If hoarding is still an issue, the code can be changed to further subdivide a coin.

The mistake Nicholas makes in this article is confusing the comparison between the dollar and the bitcoin. If you divide a $100 bill into 100 $1 bills, you will not feel any richer because the value of a single dollar bill does not change. If you divide a bitcoin into 100,000,000 Satoshis, the demand for more currency will cause an inflation in the value of an individual Satoshi.