Understanding Bitcoin’s smallest unit, the Satoshi

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Last week, the Oxford English Dictionary (OED) included the word ‘Satoshi.’

To celebrate this significant milestone, we thought it would be a great time to explain what a Satoshi is, how it works, and why it’s important for Bitcoin. 

What is the Satoshi

Put simply, a Satoshi is the tiniest unit of Bitcoin in existence.

As you’ve probably already guessed, it’s named after Satoshi Nakamoto, the mysterious creator — or creators — of Bitcoin and its underlying blockchain technology.

Understanding it

Unlike fiat currencies such as the British Pound, the US Dollar, or the Euro, Bitcoin only exists in the digital world. 

Despite this obvious difference, Bitcoin and fiat currencies have something in common: they can be broken up into smaller units. 

So, the pound has pence, the dollar and the euro have cents, and Bitcoin has Satoshis (or Sats, for short). It’s essentially another way of expressing an amount of Bitcoin without making it unnecessarily confusing

A Satoshi represents one hundred millionths of a Bitcoin. By being able to break up Bitcoin transactions into smaller denominations, they become easier to read and understand.