What are Satoshis and what can you do with them?

| 6 min read
satoshis

What are satoshis?

A satoshi, also called a sat, is the smallest unit of Bitcoin. By dividing Bitcoin (BTC) into satoshis, the use of Bitcoin becomes more practical, since 1 whole Bitcoin is a large amount of money. You don’t need to buy an entire Bitcoin, you can also buy just a part of it. This makes trading Bitcoin and using it as a means of payment more useful.

You can compare it to fiat currencies such as the euro. A euro can be divided into cents, to be precise into 100 cents (or 0.01 euro). That’s more suitable for micro-payments like groceries or tipping in a restaurant. Bitcoin, however, can be divided much further, up to eight decimal places. In other words: 1 BTC = 100,000,000 satoshis. This makes it more accessible, because instead of saying: “I’ll send you 0.00002 BTC,” you can just say you’re sending 2,000 sats. Much easier, right?

Key Takeaways

  • A satoshi (sat) is the smallest unit of Bitcoin: 1 BTC = 100,000,000 sats.
  • The name comes from the creator of Bitcoin, Satoshi Nakamoto.
  • Thanks to satoshis, Bitcoin is divisible, usable, and scalable, even at high prices or for microtransactions.
  • Sats are essential for applications like daily payments, network fees, and the Lightning Network.
  • Other denominations for fractions of Bitcoin exist, such as mBTC, µBTC (“bit”), and cBTC, making amounts easier to communicate.

Where does the name Satoshi come from?

The unit satoshi is named after the creator of Bitcoin, Satoshi Nakamoto. This is a pseudonym, and to this day it’s unknown who the founder of Bitcoin really is. In 2008 Nakamoto published the Bitcoin whitepaper, and in 2009 the network was officially launched. In the whitepaper, it was described how Bitcoin can be used as a payment system, as well as its divisibility. These coins were described as “electronic coins.” Later, the community came up with the term satoshis (or sats).

Why do satoshis exist?

When Bitcoin was designed by Satoshi Nakamoto, he didn’t know how big Bitcoin would become. What he did know is that he wanted to set a maximum supply to create value and scarcity. In total, only 21 million Bitcoins can ever be brought into circulation. That’s not much when you consider that billions of people could potentially use Bitcoin. That’s why he made Bitcoin divisible.

This gives Bitcoin immediate utility in different scenarios, such as:

  • At high prices: even if Bitcoin were worth a million euros, you could still pay with small amounts.
  • For microtransactions: sats are ideal for microtransactions; you can make payments worth just a few cents.
  • Network fees: Bitcoin runs on a blockchain, which means users have to pay BTC to carry out a transaction, also called network fees. Divisibility is necessary for the system to work and for low transaction costs to be possible.
  • For technological applications: today there are applications like the Lightning Network, which makes Bitcoin payments faster and cheaper. Without sats, it would have been impossible to build an accessible system. Thanks to divisibility and low transaction fees, it’s possible to transact in very small units.

In short: satoshis make Bitcoin scalable and practical in everyday life.

What can you use satoshis for?

Satoshis give Bitcoin practical value. In principle, you can do the same with a sat as with a whole Bitcoin. It’s useful for the following practical applications:

  • Daily payments: sats are ideal for making payments at webshops, cafés, or online services that accept Bitcoin. El Salvador has already embraced Bitcoin; here, Bitcoin sats can be used for all daily payments.
  • Microtransactions: sats are also great for microtransactions, like giving small tips or paying for content per article or video, because you can already send 0.00000001 BTC to someone.
  • Lightning Network: with the development of the Lightning Network on top of Bitcoin, it’s possible to carry out transactions faster and much cheaper. That’s why it’s ideal to use satoshis, since they are perfect for small payments.

How much Bitcoin is 1 Satoshi?

Satoshi Nakamoto set everything in the Bitcoin source code. This code is open-source and cannot be changed. A satoshi is the smallest possible divisible unit of Bitcoin. The ratios are fixed:

  • 1 Bitcoin = 100,000,000 satoshis
  • 1 satoshi = 0.00000001 Bitcoin

These ratios will never change.

A practical example:

  • Suppose 1 Bitcoin = €100,000.
  • Then 1 satoshi = €0.001 (a tenth of a cent).
  • With €1 you could buy 1,000 sats in this example.

The Bitcoin price is volatile, which means the value of a satoshi constantly changes relative to the euro.

Other denominations of divisible Bitcoin

Besides sats, several other terms have been created for fractions of a Bitcoin. Commonly used ones are:

  • 1 BTC = 100,000,000 sats
  • 1 decibitcoin (dBTC or deciBTC) = 0.1 BTC = 10,000,000 sats
  • 1 centibitcoin (cBTC) = 0.01 BTC = 1,000,000 sats
  • 1 millibitcoin (mBTC) = 0.001 BTC = 100,000 sats
  • 1 microbitcoin (µBTC or “bit”) = 0.000001 BTC = 100 sats
  • 1 satoshi (sat) = 0.00000001 BTC = smallest unit

Thanks to these terms with arithmetic breakdown, it’s easier to communicate and use amounts, especially since the value of Bitcoin has risen significantly over the years.

Final thoughts

Satoshis make Bitcoin practically usable for everyone. Since one Bitcoin can be divided into 100 million small units, it remains possible to send both large and tiny amounts, regardless of Bitcoin’s value. This makes Bitcoin suitable for daily payments, microtransactions, and innovative applications like the Lightning Network. Whether you think in whole Bitcoins or in sats, divisibility ensures that Bitcoin remains scalable, accessible, and future-proof.

About Finst

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