A pound is made up of 100 pence, a dollar of 100 cents, and a euro of 100 cents, too; even a Yuan is split into 10 Jiao. But what about Bitcoin? Is Bitcoin a divisible asset, and if so, is it advantageous or not?
Divisibility is one of the peculiarities of fiat, commodity, money, and – surprise – digital currency. It’s only normal to be so as if otherwise, one couldn’t or barely have access to something of value or use. Money has long been divided into smaller units to facilitate the exchange of goods of diverse values. Bitcoin is also characterized by divisibility, and we can only be glad that’s so, as this is critical for the coin to have practical usage as a real-life currency alternative and be further adopted throughout the globe.
One Bitcoin is thus divided into 100 million Satoshis (SATs), cryptocurrency units named after the inventor of Bitcoin.
This might seem confusing at first, but if you’re serious about your research on cryptocurrency before taking the leap, you’ll surely understand the meaning of these units and even use them to facilitate your transactions on the blockchain platform. So, if you’re looking to buy Bitcoin online on an exchange like Binance, check on these things first and determine the amount you can allocate to this particular investment.
The Satoshi
A Satoshi, named in honor of Bitcoin’s developer(s), Satoshi Nakamoto, is the smallest unit of this cryptocurrency. It’s probably the most significant denomination of Bitcoin, and part of the reason for its existence is to make smaller Bitcoin transactions more manageable and readable. Given that this coin’s price has risen considerably throughout the years – from a couple of cents to thousands of dollars – there has been an avid need to divide the original BTC so as to meet most people’s purposes and needs on the blockchain platform. Each Bitcoin is split into 100,000,000 SATs, and each SAT represents 0.00000001 BTC. This denomination also contributes to the readability of Bitcoin transactions. For example, it’s much more convenient to say that you’re being charged three Satoshi rather than 0.0000003 BTC. Or, if you purchase a $100 product or service using one Bitcoin, your charge could be about .00210028 BTC, or, in simpler terms, 210,028 SATs. Although numerous terms have tried their luck to become the official denomination of the Bitcoin currency, only Satoshi has succeeded.
“Can I buy less than one Bitcoin?”
Yes, you can, and you’re recommended to do so if you don’t have the financial resources to buy an entire Bitcoin. It’s more reasonable to purchase a fraction of the virtual currency instead of one Bitcoin at once since the BTC value has increased considerably – from a couple of cents as it was at its release to thousands of dollars as it’s today. Such units have proven helpful in micropayments, as it’s easier to read an SAT charge ringing a couple of hundred Satoshis than one comprising eight 0s.
There’s more than Satoshi
Satoshi is the official denomination of Bitcoin, but there’s more. You’ll only be thrilled to discover the many denominations used for units bigger than one SAT and even one Bitcoin. For example, the Finney, named in honor of the Bitcoin pioneer and computer scientist Hal Finney, represents 0.0000001 BTC (there are seven 0s). This, in turn, is worth 10 SATs. And the enumeration continues with the Bit or Microbitcoin (0.000 001 BTC or 100 Satoshis), Milibit (0.001 BTC or 100,000 Satoshis), Centibit (0.01 BTC or 1,000,000 Satoshis), and Decibit (0.1 BTC or 10 million SATs). And no, that’s not all. There’re also units expressing values higher than Bitcoin: Decabit (10 BTC), Hectobit (100 BTC), Kilobit (1000 BTC), and the greatest amount of Bitcoin – Megabit (1,000,000 BTC).
Usage of Satoshi
The market value of Bitcoin is reflected upon the value of Satoshi, so when the Bitcoin price rises, so will Satoshi’s price. Since Bitcoin hasn’t yet reached $1 million, one Satoshi represents less than one cent. Thus, a significant number of Bitcoin users consider it more convenient to denote the prices of products and services in Bitcoin. Nonetheless, since the Bitcoin price has surged considerably during the last couple of years – and it’s expected to reach its November 2021 all-time high again sooner or later – denominating prices in Satoshis is likely to become more common. In some instances, Satoshi is the preferred and standard measurement unit, mainly regarding micropayments. The vast majority of block explorers and wallets show transaction charges in Satoshis per vByte.
Moreover, you can exchange Satoshis and Bitcoins to and from other currencies. Virtual currency exchanges usually let users conduct various transactions, including converting between digital currencies and fiat. Transactions generally imply depositing currencies such as pounds and dollars in one of the chosen exchanges. The funds are converted into Bitcoins or Satoshis, which you can then use at sellers that accept such currencies as a form of payment. As for that, you shouldn’t worry too much, as increasingly more merchants have started to embrace cryptocurrency. Nevertheless, ensure you research the stores and merchants that accept this form of currency – Satoshi – so that you don’t find yourself in such an unpleasant situation where you can’t use your Satoshis.
The beauty of divisibility
This special property of Bitcoin and any form of money, in general, has repeatedly proved useful, helping people better grasp currencies and their usage. It’s only normal for money to be split into smaller units so that you can exchange them for different goods. But this isn’t the only purpose of divisibility – it’s also critical to ensure and encourage the purchase and practical usage of Bitcoin as a day-to-day currency and take digital payment to the next level. With this crypto’s meteoric price appreciation over the previous ten years, divisibility could be a crucial factor – if not the only factor – that makes its adoption possible and simplifies a vast range of payments that otherwise wouldn’t be achievable with traditional payment forms.
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