What Is a Satoshi?

Author: Tim Harrison
Last Updated: May 2020

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Satoshi is the smallest unit of the bitcoin currency and represents a one-hundredth millionth of a single bitcoin (0.00000001 BTC) or 100 million satoshis standing for one bitcoin.

When you measure a currency’s standing, the first thing you evaluate is its ability to serve as a unit of account or a measurement of value. To deliver such a purpose, the currency has to be divisible, and in the case with bitcoin, the use of satoshi shows that it’s even more divisible than fiat currencies.

Satoshi is used for a range of purposes which we’ll explain in our guide, together with the story behind its name and the discussions that were led on popular Bitcoin forums.

Nowadays, its use in crypto discussions is so common that in October 2019, satoshi was finally added to the Oxford English Dictionary. The separate entry in the dictionary defines satoshi as “the smallest monetary unit in the Bitcoin digital payment system, equal to one hundred millionth of a bitcoin”.

Satoshi Explained

Why “Satoshi”?

The name “satoshi” was chosen as an homage to Satoshi Nakamoto, the creator of the Bitcoin blockchain whose identity still remains unknown. Some even speculate that the pseudonym stands for a group of people instead of just one individual.

Nevertheless, it was Nakamoto, who in 2008 published a white paper under the title “Bitcoin: A Peer-to-Peer Electronic Cash System”, introducing the first completely functional digital payment system and the first digital currency to be traded with the new technology.

His system was applied on a decentralized peer-to-peer network and was able to solve the double-spending problem, i.e. prevent users from spending the same digital coin multiple times.

Who Proposed the Unit?

In the early days of Bitcoin, crypto enthusiasts would frequently take part in online discussions on forums like BitcoinTalk.org. Back then they were still a minority so making joint decisions was much easier.

The users held lengthy debates on all sorts of topics such as what should be the official bitcoin Unicode character for example. It was in that exact thread that a user named Rubuck asked the following question: “What’s the plan for subdividing Bitcoins? Do we go in thousands like the metric system (millibits, microbits, nanobits)?” Further down the thread posts, he proposed that they name the one hundredth of a bitcoin (0.01 BTC) an “austrian” or a “satoshi”. Back then, this was the smallest unit that the interface could support.

More discussion followed, until in another thread, one of the users thought it was high time they settled down on a unit: “1 satoshi = 1 microbitcent (smallest denomination); 100 million satoshis = 1 bitcoin; Are we agreed?”. The majority of the users agreed, and from then on the smallest unit became known as a satoshi.

1 Satoshi = 0.00000001 ฿
10 Satoshi = 0.00000010 ฿
100 Satoshi = 0.00000100 ฿ = 1 Bit / μBTC (you-bit)
1,000 Satoshi = 0.00001000 ฿
10,000 Satoshi = 0.00010000 ฿
100,000 Satoshi = 0.00100000 ฿ = 1 mBTC (em-bit)
1,000,000 Satoshi = 0.01000000 ฿ = 1 cBTC (bitcent)
10,000,000 Satoshi = 0.10000000 ฿
100,000,000 Satoshi = 1.00000000 ฿

(Credit: BTC Satoshi)

As of January 13th, 2020, 1 BTC is worth $8,092.77 which means that 1 Satoshi is worth $0.0000809277. You can always check their current value on the BTC Satoshi website.

Why Do We Need Satoshi?

There are three main reasons why we benefit from satoshis: to avoid decimals, to make micropayments, and to pay Bitcoin transaction fees.

  • Avoiding decimals. 

Bitcoin’s value is already much higher than what the crypto community could imagine at the time of its launch. Now, let’s say that this price will climb even higher up and reach $10,000 pretty soon.

This would mean that if you want to buy a $10 book, you’ll need to pay 0.001 BTC. However, people don’t really like dealing with decimals. On top of that, there’s the problem with bitcoin’s volatility. These were the two main challenges that the first digital coin was facing and it explains why retailers were reluctant to accept payments made in bitcoins.

While there wasn’t much one could do about the price fluctuation problem, the aversion people had towards decimals could definitely be addressed. And that’s just what the crypto community did when they introduced satoshi to the Bitcoin scene.

  • Making micropayments.

If you want to make a regular electronic payment on some online platform or through your bank, the third-party financial institution will charge you a small amount for their services. Therefore, it’s impractical and in some cases even impossible to make a very small payment or money transfer, i.e. a micropayment. This is because in such cases the transaction fee would be higher than the payment itself.

Things are different for Bitcoin. You can send a fraction of a bitcoin converted in satoshis without a problem. This creates an opportunity for new business models such as SatoshiPay. An unhosted cryptocurrency wallet, SatoshiPlay is built on blockchain technology and accepts crypto payments. Users can access a variety of media content and, paying with satoshis, they can enjoy books and videos that cost less than a dollar.

  • Paying Bitcoin transaction fees.

This type of micropayment is possible because the transaction fees on the Bitcoin blockchain are calculated in satoshis as well.

There are two types of fees that you should care about. The total fee is more important for consumers and refers to the whole fee amount that they need to pay for a transaction. The fee per byte is the one that miners care about since they have a limited number of bytes that they can include in one block of data (around 1 million bytes). They’re more likely to include a transaction that pays a higher fee per byte.

Most online platforms don’t tell you how many bytes your transaction has but you can go to Bitcoin Fees and check the median byte size of a transaction – the most common byte size in the last couple of blocks. The current median transaction size is 216 bytes, which means your transaction fee will be 1,728 satoshis.

About The Author

Tim Harrison

Tim has been working with Crypto Head since 2019 providing high quality guides and resources for our users. He's been an advisor on a number of ICO's and worked in the Cryptocurrency industry for almost 5 years. He has a wealth of knowledge to share and finds huge fulfillment with helping new people get into the industry.

Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.

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