What are some pros and cons of divisible vs. indivisible assets?

When creating an asset (coin, token), the issuer is facing several choices and one of them is divisible vs. indivisible. Which one to choose?

Let’s consider these two choices:

  • 12345 (divisible) and
  • 12345000 (indivisible)

In the first scenario should you need to sell less than one whole unit, you could sell (or buy) 3 and 1/2 units (3.5), because the asset is divisible.

In the second scenario to do the same you would buy/sell 3500 units, because the asset is indivisible and there is 1000 times more of it.

Generally speaking, currencies need to be divisible, while shares (stakes) tend to be indivisible. Most currencies have practical uses for fractional units (e.g. cents), although not all do (the Yen). Shares are usually traded in whole units.

Another issue is that of practical use. You need to consider how your asset will be used and what quantity of it should be issued. In example above, it that were a tipping asset, you’d want to people to tip in whole units, so you would have to make sure that 1 doesn’t become too “expensive” (which could be “fixed” with additional issuance, but only if the asset is not locked (i.e. additional issuance is possible)).

As always with such important decisions, it is recommended to use testnet, create several test assets (divisible, indivisible, locked, unlocked) and test various quantities and amounts.