A bit is 1/8 of a dollar or 12.5 cents.

You can figure that out from context too. 2 bits, 4 bits, 6 bits, a dollar. In sequence that means they are describing 25 cents, 50 cents, 75 cents, a dollar. Thus a bit is half of 25 cents.

The origin of bit comes from the practice of cutting the Spanish dollar (peso) into eight radial pieces to make change.

The term persists colloquially in the United States as a holdover from colonial America when Spanish dollars minted in Mexico, Bolivia and other Spanish colonies were the widest circulating coin. Spanish dollars were deemed equivalent in value to a U.S. dollar. Thus, twenty-five cents was dubbed "two bits," as it was a quarter of a Spanish dollar. Because there was no one-bit coin, a dime (10c) was sometimes called a short bit and 15c a long bit.

Even the New York Stock Exchange continued to list stock prices in eighths of a dollar until June 24, 1997 (at which time it started listing in sixteenths, but later going to decimals in 2001).

In computers there are eight bits in a byte... so there might be some relationship there to the Spanish bits... I'm not sure.

And do you remember that knock pattern (dum-da-da-dum-dum, dum dum)? The words to that are "Shave and a haircut, two bits" That must have been awhile ago because I certainly can't get a haircut these days for 25 cents... or if I could, I'd be afraid of the results. :-)