‘Satoshi’ is a word or name often associated with Bitcoin for at least two important reasons. Not only is it the pseudonym of the cryptocurrency’s creator, but it also refers to the smallest unit of Bitcoin in existence. But it’s not the only unit of Bitcoin available.
In this AAG Academy guide, we’ll explain who Satoshi is and what a satoshi is, and look at the other Bitcoin denominations that are available.
As we touched on above, a satoshi is the smallest official unit of Bitcoin. So small, in fact, that there are 100 million satoshis or ‘sats’ in a single Bitcoin. In other words, a single satoshi is worth just 0.00000001 BTC, or $0.000269 as of June 7, 2023. A single satoshi won’t be worth a whole cent until the price of BTC hits $1 million per coin — if that ever happens.
You may have noticed that we referred to satoshis as the smallest official unit of Bitcoin above. That’s because there is an even smaller but unofficial unit that is used by the Bitcoin Lightning Network. It’s called a millisatoshi, and it represents one-thousandth of a satoshi, or one-hundred-billionth of a complete BTC.
The satoshi is named after Satoshi Nakamoto, Bitcoin’s creator, who first published the Bitcoin whitepaper back in 2008, and the godfather of the entire cryptocurrency industry. No one knows whether this is a real name or just a pseudonym, since Bitcoin’s creator has always been anonymous. Some believe Nakamoto could be a whole team of people.
The idea of using Bitcoin’s creator’s name for a unit dates back to late 2010, when a user of the BitcoinTalk forum suggested that satoshi should be used to describe 0.01 BTC, which was the smallest value visible on the Bitcoin network at that time. However, the idea wasn’t picked up until the following year when Bitcoin users agreed that smaller units of Bitcoin were required.
Given that a satoshi is so small, you probably won’t be surprised to learn that there are other, more valuable units of Bitcoin. These include the millibitcoin, which is one-thousandth of a Bitcoin, or 0.001 BTC; and the microbitcoin, which is one-millionth of a Bitcoin, or 0.000001 BTC. A millibitcoin is worth 100,000 satoshis, while a microbitcoin is worth 100 satoshis.
How to use satoshi
There’s no need to go out of your way to use satoshi because there is no special process or platform for satoshi itself. It is simply a unit of Bitcoin, therefore, by using Bitcoin, you will be using satoshis, millibitcoins, and microbitcoins automatically. In fact, unless you’re making huge purchases or transfers with BTC, you’re likely using smaller units of Bitcoin exclusively.
Pros and cons of satoshi
Given that satoshi is just a small unit of Bitcoin, it doesn’t really have any cons exclusively. Its downsides are those that can be associated with Bitcoin as a whole, such as its volatility, a lack of widespread adoption, a lack of support, network scalability issues, and, depending on how you look at these things, a lack of regulation.
However, the satoshi does have its advantages. As Bitcoin’s value grew and grew over time, it became apparent that using BTC for smaller purchases wasn’t going to be practical. You cannot buy a T-shirt or even a computer with a coin that has a minimum value of around $26,000. Smaller units of Bitcoin, like satoshis, are required to make those transactions possible.
Yes, Satoshi Nakamoto is the inventor of Bitcoin. However, due to their anonymity, we don’t know who Nakamoto is, or whether they are an entire group of people.
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About the author
Senior content writer
Senior copywriter for AAG Marketing team with the focus of educating our community on all things web3, blockchain and Metaverse.
This article is intended to provide generalized information designed to educate a broad segment of the public; it does not give personalized investment, legal, or other business and professional advice. Before taking any action, you should always consult with your own financial, legal, tax, investment, or other professional for advice on matters that affect you and/or your business.