In the United States, the bit is equal to ⅛ of a dollar or 12½ cents. In the U.S., the "bit" as a designation for money dates from the colonial period, when the most common unit of currency used was the Spanish dollar, also known as "piece of eight", which was worth 8 Spanish silver reales. One eighth of a dollar or one silver real was one "bit".
With the adoption of the decimal U.S. currency in 1794, there was no longer a coin worth ⅛ of a dollar but "two bits" remained in the language with the meaning of one quarter dollar, "four bits" half dollar, etc. Because there was no one-bit coin, a dime (10 ¢) was sometimes called a short bit and 15¢ a long bit.
- In the Pacific States they have made a bolder push for complexity, and settle their affairs by a coin that no longer exists – the BIT, or old Mexican real. The supposed value of the bit is twelve and a half cents, eight to the dollar. When it comes to two bits, the quarter-dollar stands for the required amount. But how about an odd bit? The nearest coin to it is a dime, which is, short by a fifth. That, then, is called a SHORT bit. If you have one, you lay it triumphantly down, and save two and a half cents. But if you have not, and lay down a quarter, the bar-keeper or shopman calmly tenders you a dime by way of change; and thus you have paid what is called a LONG BIT, and lost two and a half cents, or even, by comparison with a short bit, five cents.
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"Two bits" or "two bit" continues in general use as a colloquial expression, primarily because of the song catchphrase "Shave and a Haircut, two bits." As an adjective, "two-bit" can be used to describe something cheap or unworthy.
The U.S. budget record label Crown (1930-1933) advertised on their sleeve, "2 Hits for 2 Bits" (25 cents).
Another example of the use of "bit" can be found in the poem "Six-Bits Blues" by Langston Hughes, which includes the following couplet: Gimme six bits' worth o'ticket / On a train that runs somewhere.... The expression also survives in the sports cheer "Two bits, four bits, six bits, a dollar ... all for (player's name), stand up and holler!"
The New York Stock Exchange continued to list stock prices in eighths of a dollar until June 24, 1997, at which time it started listing in sixteenths. It did not fully implement decimal listing until January 29, 2001.
Danish West Indies
From 1905 to 1917, the Danish West Indies used stamps denominated in bits and francs with 100 bits to the franc; the lowest value was five bits.
United Kingdom, Commonwealth countries and Ireland
In Britain, Ireland and parts of the former British Empire, where before decimalisation a British-style currency of "pounds, shillings and pence" was in use, the word "bit" was used differently. Rather than representing a specific monetary value, it was applied colloquially to a range of low-denomination coins in the sense of "coin" or "piece of money". Thus a threepence coin or "threepenny piece" would become a "threepenny bit", usually pronounced "thru'penny bit".
The term was used only of coins representing multiple values – a penny coin was simply a "penny", not a "penny bit", a shilling coin was a "shilling", a half crown coin was "half-a-crown" – but anything valued at more than a unit could attract the suffix "bit".
Although earlier there had been other values in circulation such as the "fourpenny bit" or "groat", the "bit" coins still in use in the United Kingdom up to decimalisation in 1971 were the two-shilling bit (often "two-bob bit"), the sixpenny bit (or "tanner"), and the threepenny bit.
In the UK, use of the term "bit" largely disappeared with the arrival of decimal coinage and the loss of the coin denominations to which it had applied. Thus a ten pence piece is referred to merely as "ten pence", or even "ten pee", not as a "tenpenny bit".
The historic American adjective "two-bit" (to describe something worthless or insignificant) has a British equivalent in "tuppenny-ha'penny" – literally, worth two and half (old) pence.
In the Bitcoin digital currency, a Bitcoin (also notated as '1 BTC' or '1 XBT') is divided into 1 million (1,000,000) 'bits'. Each bit is subdivided into 100 'satoshis', which as of 2014 are the smallest unit of account in Bitcoin. The advantage of using bits and satoshis is that most people are familiar with using entire units of currency, subdivided by two decimal places. For example, a cup of coffee might be 3,500 bits rather than 0.00035 BTC.
- Across the Plains & Homeward: With Other Memories and Essays – Robert Stevenson, John Hyde – Google Books
- According to the Oxford English Dictionary the use of the word "bit" in this sense was first recorded in 1829.
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