What is the monetary value of two bits?

Answer 1

The American colonies originally used the so-called Spanish dollar, or eight-real coin, as their primary currency unit. Because smaller denomination didn't circulate, it was common to make change by cutting the coins into halves, quarters, and eighths a bit like slicing a Pizza. The smallest piece (worth 1/8 of a dollar or 1 real) was called a bit in English.

When the US set up its own monetary system in the late 1780s, Thomas Jefferson decided to adopt a decimal (10-based) system with 100 cents to the dollar rather than using fractions of 8. However Spanish dollars continued to circulate alongside American dollars so compatibility between the two systems was important. 100 doesn't divide evenly into eighths so you could no longer spend a single "bit" (1/8 of a dollar) but it does divide evenly by 4. For that reason it was decided to make 25-cent coins that were worth 1/4 of a dollar. Because that's the same as 2/8 of a dollar the coin quickly was called "two bits".

Today most countries that use decimal money systems have 20-cent pieces rather than quarters because that denomination is more consistent with multiples and fractions of 10. However by the time the US stopped using Spanish dollars in 1857, the 25-cent coin was so well established in commerce that it remains the country's "workhorse" coin.