What Are Satoshis, the Smallest Units of Bitcoin?
See also: ¿Qué son los Satoshis, las unidades más pequeñas de Bitcoin?
Buying one bitcoin can cost you around $40,000, $50,000, $60,000 or some other amount, depending on the week. Too expensive for you? Well, it’s understandable since not a lot of people can pay those kinds of prices.
But what if buying bitcoin would be like walking into a pizza restaurant. Instead of buying one whole bitcoin, you could choose to buy slices of it, just like pizza?
Top secret revealed!
You don’t have to buy one whole bitcoin! Unfortunately, many people still have the misconception that Bitcoin is somehow indivisible and that you have to invest tens of thousands of dollars to buy bitcoin. Nothing could be further from the truth!
Almost since Bitcoin’s birth, it has been possible to divide one bitcoin into smaller units. This may not come as a surprise for you, if you have already been buying bitcoin with PayPal or with your local currency on LocalBitcoins.
But imagine if you were new to Bitcoin and you didn’t have any idea what it was. You might think Bitcoin is a physical object, some kind of a big, shiny coin you can carry around with you, or even fill your backpack with.
However, that’s not how it works in the digital world where Bitcoin serves as a censorship-resistant and decentralized payment technology and cryptocurrency.
One bitcoin has 100 million smaller units
One bitcoin is divided into 100 million satoshis (also known as sats). Just like one US dollar is divided into 100 cents. Satoshis are named after Bitcoin’s pseudonymous and mysterious creator, Satoshi Nakamoto, and they are bitcoin just like bitcoin is, only smaller units.
Why 100 million? Well, breaking Bitcoin down into smaller units makes its transactions simpler and easier to carry out. If Bitcoin becomes more frequently used as a currency, like in El Salvador where it is now an official currency, it might not be as convenient to list prices in BTC, considering the price of Bitcoin would most likely be even higher than it is now.
Getting rid of decimals!
Imagine if you walked into a coffee shop and you wanted to buy a cup of coffee but the price would list 0.000003 BTC, you’d have to stare very closely at the price tag to make sure you’d pay the right amount. Wouldn’t it be much easier for everybody if the seller just listed the price as 3000 satoshis?
Listing prices in BTC rather than satoshis can also lead to detrimental mistakes with decimal points. Imagine if you had to pay an invoice of 0.0005 BTC to somebody, but got distracted and accidentally sent 0.005 BTC, an amount possibly close to your monthly salary! It’s important to be careful when sending bitcoin since Bitcoin transactions are irreversible.
If Bitcoin becomes more used in micropayments in the future, with possibly the help of the popular second-layer solution, Lightning Network, then satoshis will come in handy. Imagine if you could listen to music and pay the artist some satoshis real-time as you’re listening, based on the exact amount of minutes and seconds you listen.
Buying satoshis is made easy on LocalBitcoins. If you still haven’t bought your first sats, you can sign up to LocalBitcoins and make your first trade. Remember, it’s OK to start small. That’s the whole point of satoshis.
Happy trading!
