✌️️ Why Two Bit?

Two-bits, four-bits, six-bits and eight-bits make reference to the eight-reales silver coin of New Spain and Mexico. It is also called piece of eight and circulated in the English Colonies and freely in the USA following the Revolutionary War. As a matter of fact, the eight-reales coin was legal tender in the United States until 1857 and was the world’s most used coin at one time. The silver pieces of eight began their travels from the New World to Spain and then on to Asia and Africa. A great convenience of coins is that they are readily exchanged for goods and services.

The English colonies of America were prohibited by royal law from coining, minting, or even so much as using coins. The colonists were supposed to ship any and all coins to Mother England in payment for manufactured goods. This, of course, precluded any foolhardy colonist from starting a mint. Besides, there is little silver or gold to be had in New England and eastern Canada to this day. So, the English Colonies decided to use paper money which served them well until they attempted to finance the USA Revolutionary War with it. By 1780, this form of currency became useless and worthless and the money called Continental Currency collapsed.

The vacuum was immediately filled by the milled Spanish-American silver issues based on the real system in denominations of 1/8R through eight-reales. The most widely circulated of these was the piece of eight, which, when supplies of smaller denomination coins dwindled were chopped or cut into smaller pieces to make change. Thus, one eighth of eight-reales became one bit, one quarter two-bits — the equivalent of our present day quarter-dollar. One-half is four-bits and three quarters are six-bits.

When making plans for a monetary system, the United States considered a system based on the piece of eight, which was renamed “dollar” in the 1780’s.