The Penny Is Dead, But Precision Isn't

Next time you're at a gas station, look up at the sign. The price isn't $2.43 a gallon. It's $2.42 and nine-tenths of a cent. That trailing 9/10 has been sitting on a forty-foot sign your entire life, charging you a fraction of a penny in public, and you've probably never given it a second thought.

Hold that image, because on November 12, 2025, the U.S. Treasurer struck the last circulating penny at the Mint's Philadelphia facility. Two hundred and thirty-two years of production, ended with a little ceremony and a photo op. The official reason is hard to argue with: a penny costs 3.69 cents to make, and killing it saves the Mint about $56 million a year. By the numbers, it's the obvious call.

I'm going to mourn it anyway.

Not because the penny was good money. It wasn't. It was a coin you couldn't actually spend one at a time, that piled up in jars and cup holders and the little dish by the register. But the penny was the last honest unit of physical cash we had. It was the smallest piece of value you could hold in your hand, hand to someone else, and have the whole transaction be over and done with the moment it changed hands. No record. No account. No middleman taking a cut or keeping a log. Losing it bothers me more than the accountants think it should, and I want to explain why. The gas sign is where the explanation starts.

We have always paid in fractions of a cent

That 9/10 didn't start as a marketing gimmick, though it certainly became one. When the Revenue Act of 1932 created the first federal gas tax at a penny a gallon, gas cost about 20 cents. A full cent was a 5% price increase overnight. Station owners didn't want to eat it and didn't want to raise prices by a whole penny, so they split the difference in tenths and passed along part of the tax. Later, when the interstates went in, somebody noticed that $2.42-and-change reads as "two forty-two" to a driver at 70 miles an hour. The illusion stuck. It's the same trick as $1.99, just with an extra decimal.

But the legal basis goes back much further. The Coinage Act of 1792 made it legal to price things to one-thousandth of a dollar, a unit called a mill. We never minted a mill coin, but we've been pricing in mills for over two centuries. If you own property in most counties in this country, your tax bill is calculated on a millage rate, which is literally dollars per thousand. Your power bill is quoted in fractions of a cent per kilowatt-hour. Stock issuances do it. Interest calculations do it.

So the sub-penny is not some crypto novelty. It is the oldest pricing convention in American commerce. We have simply never let you hold one.

The same week, in crypto, the opposite happened

Here's the part that's been rattling around in my head. The same week we decided a hundredth of a dollar was too small and too expensive to bother tracking in your pocket, I could have opened a wallet and sent someone USDC, a dollar-pegged stablecoin, denominated down to one ten-thousandth of a single cent. USDC carries six decimal places. Its smallest unit is $0.000001.

Nobody put six decimals in USDC as a joke. Circle did it because at scale, in lending, in payments, in currency conversion, in machine-to-machine transactions that fire a million times an hour, that fraction is money. It's real. It matters enough to engineer for. Which is exactly what the gas station figured out in 1932 and what your county tax assessor has known forever: the fraction of a cent is meaningful wherever it accumulates.

So precision didn't get harder. Computers are very good at small numbers and they got cheaper at it every year. Precision got removed from one specific place. The place where it was private.

Killing the penny is a bet against the dollar

Here's the part I find most telling, and nobody in the coverage said it out loud.

Think about what it means to retire your smallest denomination. You only do that if you're confident you will never need it again. And you'd only be confident of that if you believe prices are going up forever, permanently, with no scenario where the dollar buys more tomorrow than it does today. A stronger dollar means lower prices, and lower prices make small units more useful, not less. Try the exercise yourself: name the future in which we bring the penny back. Deflation? A dollar that gains ground for a decade? You can't name one, and neither can Treasury. That's what the decision actually says.

We've done this before, and the precedent is worse than people realize. The Coinage Act of 1857 killed the half cent for being too small to bother with. At the moment they retired it, a half cent was worth about 15 cents in today's money. More purchasing power than a modern dime. They didn't kill a worthless coin. They killed a genuinely useful one, because inflation had already made it annoying and they knew which direction things were headed. They were right. That's the depressing part.

And the sequel is already in production. A nickel now costs nearly 14 cents to make, a worse ratio than the penny ever had, and at least one bill in Congress is eyeing it. After 1857 and 2025, you know how that vote eventually goes.

Meanwhile, hold the contradiction up to the light. Officially, a hundredth of a dollar is now too trivial to track. Simultaneously, the private digital economy is engineering to a millionth of a dollar because it's worth real money. Both of these things can't be true about the same currency. What's actually true is that the fraction still matters enormously. It just doesn't matter to you, in cash, at the register. It matters to the systems doing the counting.

Where the rounding actually lands

This is the detail most of the coverage glides right past. When the penny goes away, prices don't round for everyone. They round for cash. If you pay with a card, your transaction still settles to the exact cent, because the card network is just moving numbers in a database and numbers are free. The merchant rings up $4.97 and the bank moves $4.97. Nothing to round.

But if you pay with cash, the merchant has no pennies to make change, so the total gets rounded to the nearest nickel. Sometimes in your favor, sometimes not. The defenders say it washes out, and across the whole economy it mostly does. The Federal Reserve puts the "rounding tax" at around $6 million a year, which in a multi-trillion-dollar economy is a rounding error in the most literal sense.

But "it washes out on average" is the kind of thing people say when they've never had to make a specific dollar stretch to Friday. The Fed's own researchers are clear that this cost doesn't land evenly. The Richmond Fed and the Atlanta Fed both note the burden falls hardest on the people most likely to pay in cash, and the Fed has long found that low-income people and minorities use cash more than anyone else. Often that's someone who is unbanked or underbanked. Someone without a credit card, or without a bank at all. Someone paid in cash, who pays in cash, because that is the financial system they actually have access to.

Look at what we've built here. The gas station charges everyone in tenths of a cent. USDC counts to a millionth. The card networks settle to the exact penny. Every part of this economy retains its precision except the one where a working person hands another person a physical dollar. That's the only place we decided precision was too expensive.

I don't think it's a conspiracy. I think it's a current.

Let me be clear about what I'm not saying. I don't believe a room full of officials decided to kill the penny in order to squeeze poor people or to herd anybody onto a card. The cost math is real, the penny is impractical, and most of the people who pushed for this just wanted to stop minting coins that end up in a jar. There was no villain at that ceremony in Philadelphia.

What I'm saying is that intent barely matters when the current all runs one direction. Almost every decision about money over the last twenty years has quietly pushed value out of the form you can hold and into the form that gets logged. Cash is the only money you can spend without a record. No bank sees it. No processor scores it. No app builds a profile from it. It is the last analog asset in a digital economy, and it isn't dying by ban. It's dying by a thousand small frictions. Exact change you can no longer make. Businesses that stopped accepting it. A register total that no longer matches the price on the shelf.

The penny isn't the cause of any of that. The penny is the canary.

Trackable by default

Want to know what the logged version of your life looks like? Pull up last month's card statement and read it the way a stranger would. The 6:15am coffee tells them when you wake up and which corner you stand on every morning. The pharmacy charge hints at a condition you haven't mentioned to anyone. The recurring Friday charge at the same restaurant maps your habits down to the hour. The liquor store frequency is a data point an insurer would love to price. You don't see a statement. A data broker sees a biography, timestamped and sworn to under penalty of accurate accounting.

I have some standing to say this, because I've spent most of my career on the collecting end of data. I started a company whose whole premise was figuring out where an Internet user was located from their connection, and my current company exists because organizations keep losing control of the data they hoard. Here is the one lesson that experience keeps teaching: data that exists gets used, and it never gets used less over time. It gets sold, merged, scored, breached, and subpoenaed. The polite word for this is analytics. Whatever you call it, no one ever collects less of it next year.

The standard answer is "I have nothing to hide." But that misunderstands what privacy is for. Privacy isn't about hiding wrongdoing. It's about the asymmetry of someone else keeping a permanent, searchable ledger of your life that you can't see, can't correct, and can't delete, maintained by parties whose interests are not yours. You lock your front door and you're not hiding a crime scene. The ledger doesn't need you to be guilty to cost you something. It only needs a buyer.

And we don't have to imagine where trackable-by-default leads, because China already runs the completed version: payment platforms wired into a social credit system that rewards and punishes citizens based on how they spend. That's not a story about crypto or pennies. It's a story about what becomes possible the moment every transaction leaves a trace and no untraceable alternative survives.

Here's the irony I keep coming back to as someone who builds things for a living. The technology is not forcing us toward less privacy. USDC proves you can have a digital dollar precise to a millionth of itself, and depending on how it's designed, you can build privacy-preserving payment systems on top of that. The math for private digital money exists. The cryptography exists. What's missing is the will to ship it, because trackable-by-default serves the institutions building the rails. The penny going away and USDC going to six decimals are not opposite trends. They're the same trend in different clothes. Value is moving into systems someone else controls and someone else can watch.

Sweden already found out

If you think this is all a privacy crank's worry, consider the country that actually ran the experiment. Sweden went further down the cashless road than anyone, with more than 90% of transactions digital. Then its central bank looked at what it had built and blinked. The Riksbank now urges every adult to keep about a week's worth of cash at home, roughly 1,000 kronor, in case a cyberattack or a war takes the payment networks down. The most cashless nation on earth officially told its citizens: hold cash, because the digital system we built is a single point of failure.

That's not nostalgia talking. That's a central bank admitting that a society with no analog fallback is fragile in a way no efficiency gain justifies. Cash isn't just private. It's resilient. It works when the power is out, when the network is down, when the platform freezes your account by mistake, when somebody in an office decides your transaction looks suspicious. Every one of those failure modes is real, and every one of them is invisible right up until the day it isn't.

What I'm actually watching

So I'll mourn the penny, but not for the coin. I won't miss the jar. What I'll miss is what the penny stood for, which is the idea that you could settle up with another human being completely, privately, and instantly, with no institution sitting in the middle of it.

The thing worth watching is the pattern the penny is one small, early piece of. Cash gets a little less usable. Card data gets a little more valuable. Digital money gets more precise for the people running the systems and more opaque to the people using them. None of these steps is dramatic on its own. That's exactly why they work. You don't notice a current until you look up and see how far it has carried you.

There's also something you can do about it, and it costs nothing. Use cash more often. Pick a coffee shop, a farmers market, a barber, and pay in paper once a week, on purpose. Not because any single transaction matters, but because the infrastructure of private payment only survives if people keep using it. Merchants keep taking cash because customers keep offering it. The day they stop, the choice quietly disappears, and Sweden's central bank just told you what it costs to want it back.

The question I'd leave you with isn't "should we have kept the penny." It's "do you still have a way to spend a dollar that nobody else gets to watch?" For now, the answer is yes. Pay attention to how long that stays true, and to who benefits each time the answer gets a little weaker. We never stopped counting in fractions of a cent. We just stopped letting you hold one.