What is a satoshi?

A satoshi is the smallest unit of bitcoin. One bitcoin is made up of 100 million satoshis, so a single satoshi equals 0.00000001 bitcoin. The unit is named after Satoshi Nakamoto, the pseudonymous creator of bitcoin.

Why does bitcoin need a smaller unit?

A dollar divides into 100 cents. Bitcoin divides much further, to eight decimal places. That matters because a whole bitcoin has for years been worth far more than an everyday purchase. Without small units, the currency would be useless for small payments.

Satoshis, often shortened to "sats", let people price and send tiny amounts. The bitcoin software itself counts everything in satoshis. When a wallet shows a balance of 0.005 bitcoin, the network records it as 500,000 satoshis.

The name did not appear in the original software. Users on an online bitcoin forum proposed it in the network's early years, and it caught on as a tribute to the network's creator.

Can you buy less than one bitcoin?

Yes. There is no requirement to buy a whole coin. Exchanges and apps let customers buy a fraction of a bitcoin by entering an amount in dollars or another currency, and each platform sets its own minimum. The buyer receives the matching number of satoshis.

A fraction of a bitcoin behaves exactly like a whole one. It can be sent, received or sold in the same way, and its price moves by the same percentage. Owning a small slice does not reduce the risk.

What other bitcoin units are there?

• Bitcoin (BTC). 100,000,000 satoshis.
• Millibitcoin (mBTC). One thousandth of a bitcoin, or 100,000 satoshis.
• Bit, or microbitcoin. One millionth of a bitcoin, or 100 satoshis.
• Satoshi (sat). The smallest unit recorded on the bitcoin blockchain.

In practice, most people use only bitcoin and satoshis. The Lightning Network, a system built on top of bitcoin for fast small payments, goes one step further. It tracks thousandths of a satoshi, called millisatoshis, inside its payment channels. Those are rounded to whole satoshis when balances are settled on the main blockchain.

How do satoshis relate to the 21 million limit?

The satoshi sets the precision of the whole system. Bitcoin's 21 million coin cap works out to a maximum of 2.1 quadrillion satoshis. The reward paid to miners is also counted in satoshis. When repeated halvings shrink it below one satoshi, around the year 2140, no new bitcoin will be created.

Some bitcoin users argue that prices should be quoted in satoshis to make small amounts easier to read. Critics counter that long strings of digits are no easier for newcomers, and that a low price per unit can make an asset look cheaper than it is.