Each bitcoin (BTC) is divisible to the 8th decimal place, so each BTC can be split into 100,000,000 units. Each unit of bitcoin, or 0.00000001 bitcoin, is called a Satoshi. A Satoshi is the smallest unit of Bitcoin.
There are 100,000,000 satoshi in a BTC.
Satoshis are named after the mysterious, pseudonymous creator of Bitcoin — Satoshi Nakamoto. A satoshi is the smallest unit used to measure Bitcoin on the Bitcoin blockchain.
Each Bitcoin can be divided up into a tiny fraction of a Bitcoin — it’s possible to send one-tenth, one-hundredth, or one-thousandth of a Bitcoin, and so on. These fractions are officially called “satoshis”
The term satoshi stems from a conversation between early Bitcoin developers and community members on the BitcoinTalk forum in 2010.
Subsequent to a user poll regarding focused on determining the best Unicode character to use to represent Bitcoin, user discussion resulted in the confirmation that one satoshi would represent 0.00000001 BTC — the smallest unit that could be recorded on the Bitcoin blockchain.
Satoshis are important because they are used to calculate the fees paid to Bitcoin miners for processing transactions.
Every transaction on the Bitcoin blockchain has a data size measured in bytes. When you make a transaction on the Bitcoin network, you’ll need to pay a specific amount of satoshis per byte of transaction data. Transactions with a higher satoshi per byte fee will be processed first, before lower satoshi per byte fees.
Bitcoin can be divided into a variety of different denominations — 1,000 millibitcoins (mBTC), 1,000,000 microbitcoins (μBTC), or 100,000,000 satoshis.
One satoshi is therefore equivalent to one-hundredth millionth of a Bitcoin. If the price of Bitcoin ever reached $100 million USD, each satoshi would be worth $1 USD.
Bits represent one-millionth of a Bitcoin or one hundred satoshis. The use of the Bits in fractions has a number of advantages when dealing with smaller amounts of Bitcoin.
Bits, for example, are more compatible with financial software that struggles to handle more than two decimal places — using figures such as 10 bits rather than .00001 Bitcoin can make accounting easier.
“Sats,” or a “sat,” is shorthand for satoshi — the cryptocurrency community is fond of abbreviating complex words. “Decentralized application” becomes “dApp,” “Proof of Work” becomes “PoW”, and satoshi becomes sat.