The current encoding of bitcoin on the wire allows for division to 8 decimal places, but there is discussion around improving the encoding sooner, rather than later. https://en.bitcoin.it/wiki/Divisibility_extension

There is no requirement for any number of coins to be in the system. The amounts are infinitely divisible. You could start the economy with 1 bitcoin, and break it into 7 billion fractions for everyone to share..and if all those are lost, you could do the same with the last 1 bitcoin again.

> There is no requirement for any number of coins to be in the system.

The math works out such that there are a precise number of bitcoins in the system, ~21M IIRC.

> The amounts are infinitely divisible.

8 decimal places.

Is that alot? Yes, but my point was that the current system is leaky. The rate of leakage may not be too bad now, but as the adoption rate goes up more careless nontechnical folks will get involved. Those people will fail to backup their wallets; that BTC will evaporate is an inevitable consequence of success.

>8 decimal places

This is a client-specific value, and not a necessary property of the protocol. They can become arbitrarily divisible by simply modifying the client code.

Of course new clients will not be compatible with old clients.