A beginner’s guide to Satoshi: The smallest unit of Bitcoin

Bitcoin (BTC) was the first cryptocurrency to ever be created, and is now the largest by market cap. You can find it on almost any digital currency exchange. While Bitcoin was intended to act as a currency, its technological flaws make it better suited to be an investment asset. The problem with this is that 1 BTC costs a lot of money, therefore very few people can afford to buy a whole Bitcoin.

Luckily, they don’t have to, as Bitcoin can be broken down into smaller units. Similar to how the US dollar has a cent, Bitcoin has a satoshi — its smallest unit. This guide will tell you everything there is to know about them.

What is a satoshi?

A satoshi is the smallest unit of Bitcoin. It represents one-hundred-millionth of 1 BTC, and it was named after the mysterious creator of the Bitcoin protocol, Satoshi Nakamoto. Obviously, when Bitcoin first appeared, it didn’t have the need for a smaller denomination of its currency. In the early days of Bitcoin, the price of BTC was measured in cents. However, these days, when each BTC costs thousands of dollars, it is very useful to divide it into satoshis.

Fortunately, even with Bitcoin’s massive price appreciation, satoshis are still very affordable for crypto users. In fact, even if BTC price reached $1 million per coin, 1 satoshi would still only cost $0.01. Whether or not Bitcoin can or will ever reach that height remains to be seen.

But, the fact remains that a whole Bitcoin is still too expensive for the majority of traders. Because of that, satoshis come in quite handy, as they allow everyone to still use portions of BTC. Otherwise, Bitcoin would simply not be affordable for anyone other than the wealthy and institutional investors.

History of satoshi

The history of satoshi starts with Bitcoin, and the Bitcoin Protocol itself. Back in 2008, when the world was struck with a financial crisis, an unknown entity called Satoshi Nakamoto emerged. To this day, it is unknown if Nakamoto was an individual, a group, a company, or something else entirely.

However, on October 31st, 2008, Nakamoto published the Bitcoin whitepaper. This was the document that presented a decentralized network running on blockchain technology. It introduced Bitcoin as its digital currency, establishing all aspects of the project.

Several months later, on January 3rd, 2009, Nakamoto mined Bitcoin’s Genesis Block. This was, and still is, the first block in Bitcoin’s blockchain. He created BTC so that it can be divided into smaller units. The smallest unit is one hundred millionth of 1 BTC. This unit was then named satoshi, in honor of Bitcoin’s creator.

The name ¨satoshi¨ was actually first mentioned by ribuck, a member of the BitcoinTalk forum. The user first proposed this on November 15th, 2010. Ribuck’s initial idea was to use this name for one-hundredth of a BTC. However, later, he changed his mind, proposing to use the name for the smallest unit. Other members of the forum agreed, and started using the name.

How does the satoshi work?

Given that a satoshi is just a small amount of Bitcoin, it behaves exactly like BTC. It runs on Bitcoin’s decentralized network, and can be used for bitcoin transactions, payments, trading, and alike. Sometimes, people don’t even use the name satoshi, but instead they say the amount in BTC.

For example, if you were to buy $250 worth of BTC, you can say that in two ways. You can refer to it as 0.00912295 BTC (based on the price at the time of writing). Alternatively, you can just say 912,295 satoshis. It means the same thing, and it is entirely up to the user to choose how to explain this amount. On exchanges, you will have to type it as the value of Bitcoin, since satoshi is not officially supported.

How can you use satoshis?

Since a satoshi is Bitcoin, only of a different denomination, you can use them interchangeably. Satoshis do not have any advantages or flaws in comparison to BTC. The only advantage comes from the fact that a satoshi is more affordable. A whole Bitcoin is too expensive for most traders, investors, or people who use BTC for payments.

As for the actual use cases for satoshis, they can include the following:

  • Buying and selling on nearly any digital currency exchange
  • Trading it for other cryptocurrencies
  • Buying products or paying for services where Bitcoin is accepted
  • Speculative investing

Buying satoshis is also very simple. All you need to do is go to any crypto exchange, and purchase any amount of Bitcoin. To refer to our example, by buying BTC for $250, you will own 0.00912295 BTC or 912,295 satoshis. Satoshi in Bitcoin and US dollar Let's compare it to BTC and US dollars to make it easy to understand how much a satoshi is worth.

  • 1 BTC consists of 100,000,000 satoshis, and it costs $27,378 at the time of writing
  • 1 satoshi represents 0.00000001 BTC
  • In US dollars, the value of 1 satoshi is $0.00027
  • $1 is (currently) worth 0.00003653 BTC, or 3,653 satoshis
  • $10 is (currently) worth 36,526 satoshis, and $100 is worth 365,255 satoshis
  • 1 million satoshis is the same as 0.01 BTC, and is (currently) worth around $273

Converter

Note that the price of Bitcoin changes constantly, which means that the dollar value of satoshi does too. In other words, 1 BTC will always be equal to 100,000,000 satoshis. However, the two will not always have the same value in USD or other fiat currencies.

How does satoshi differ from other digital denominations?

Many currencies, crypto and fiat, use denominations to break down the value of the base currency. In crypto, the denominations are specific to the preferences of the cryptocurrency’s designer. Bitcoin uses satoshis, as we have established. Ethereum, on the other hand, has several denominations of its own. It’s similar to the penny, nickel, dime, and quarter

This makes it easier for users to trade amounts that do not require a full coin/token. Of course, their differences could be confusing for new investors, who have yet to get used to smaller denominations.

When it comes to fractions of Bitcoin, there are several denominations to consider, including:

  • 1 satoshi, which is 0.00000001 BTC
  • 100 satoshi, called microbitcoin (µBTC), which is 0.000001 BTC
  • 100,000 satoshi, called millibitcoin (mBTC), which is 0.001 BTC

Measure

In the case of Ethereum, we have wei, which is the smallest unit of Ether.

  • 1 wei = 0.000000001 Gwei = 0.000000000000000001 ETH
  • 1,000,000,000 wei = 1 Gwei = 0.000000001 ETH
  • 1,000,000,000,000,000,000 wei = 1000000000 Gwei = 1 ETH

Legacy of Satoshi Nakamoto

Satoshi Nakamoto created Bitcoin after the financial crisis of 2008, when the banks once again failed their users. To Nakamoto, they have proven that they could not be trusted with money, so he created a decentralized system. This was supposed to be an alternative for fiat currency and banking systems. Today, Bitcoin is growing into something more than just a currency. However, thanks to its design and code, it can still be used as a currency.

But, since 1 BTC is extremely expensive today, and most people cannot afford it, we turn to satoshis. The smallest unit of BTC is still affordable, being only a fraction of a cent. As of 2023, it’s been over 12 years since Satoshi Nakamoto disappeared. However, his invention is still alive and conquering the world as we speak. It even kickstarted a massive industry that is growing larger and more disruptive every year. As such, BTC, as well as Satoshi, represent Nakamoto’s legacy. And, with that being the case, it is quite appropriate that his name is being used for Bitcoin’s smaller units.


FAQs

What does satoshi mean?

Satoshi is the smallest unit of Bitcoin, representing 0.00000001 BTC. Each Bitcoin contains 100 million satoshis. This ensures that anyone can purchase any amount of Bitcoin, regardless of their budget.

How many dollars is 1 satoshi?

According to the BTC price at the time of writing, 1 satoshi equals $0.00027. Note that, just like Bitcoin, satoshi value changes over time. This means that satoshi will not keep this value indefinitely, it will grow or drop with the market.

How many is 1000 satoshi?

As of May 2023, 1000 satoshis is worth $0.27, or 0.00001 BTC. Once again, satoshi’s value changes alongside Bitcoin. 1,000 satoshis will always be worth 0.00001 BTC, but its USD value is as volatile as Bitcoin’s.

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