News hardware Bitcoin Cents: What is a Satoshi (SAT)?
Despite the fall in prices, holding a Bitcoin will still cost you the price of a nice new car… For this reason, rare are those who hold a unit of a BTC. However, a multitude of these investors own Satoshis, the smallest unit of measurement of a bitcoin.
- The story of Satoshi
- How much is a satoshi (SAT) worth?
- Satoshi: the bitcoin minimal unit is essential
- Will the calculation in Satoshi replace that in Bitcoin?
- The subunits already used by lovers of bitcoin and other cryptocurrencies
The story of Satoshi
The smallest bitcoin unit of measurement is named after Satoshi Nakamoto, the inventor of bitcoin. However, the idea did not come from the inventor himself, but from a Bitcointalk forum user. In 2010, a year after the launch of Bitcoin, a man named “Ribuck” submitted the concept of the satoshi unit. The user first explains that he uses the term satoshi for 1/100th of a bitcoin.
A few months later, after a global consensus from Bitcoin followers, the satoshi will become one of the smallest units of Bitcoin measurement.
How much is a satoshi (SAT) worth?
In the same way as the euro or the dollar, Bitcoin has its own “cents”.
Concretely, one satoshi represents 0.00000001 BTC. In other words, to arrive at the sum of one bitcoin, it requires 100 million satoshis.
Satoshi is not the only Bitcoin sub-measure used, however.
|dBTC||Say bitcoin||0.1 BTC|
|cBTC||Hundred Bitcoins||0.01 BTC|
|mBTC||Milli Bitcoin||0.001 BTC|
As the blockchain evolves, it risks imposing these new units as standards despite fractions of BTC.
Satoshi: the bitcoin minimal unit is essential
Introduced in 2011, this term Satoshi unit (SAT) has taken on special importance over the years for Bitcoin enthusiasts.
With the considerable rise in the price of Bitcoin, it is therefore less available in abundance. While it took €6 to hold around 100 bitcoins in 2010, today it takes €2,000,000. This price increase is linked to the growing demand for cryptocurrencies over the past 10 years.
In this context, crypto investors are less and less likely to hold even one BTC. However, by having a fraction of Bitcoin, these are millionaires in Satoshi.
Will the calculation in Satoshi replace that in Bitcoin?
The further we go in time, the lower the rewards in BTC… Since 2020, we know that bitcoin miners receive 6.25 BTC for each new block. In the next halving in 2024, the remuneration will increase to 3.125 bitcoins. Thus, we know that from 2032, miners will receive less than 1 bitcoin per mined block (about 0.78 BTC or 780 million Satoshi). Therefore, as we get closer to the maximum quantity of 21 million Bitcoin, the Satoshi unit may be increasingly used to count the famous cryptocurrency.
Question of interpretation, the Satoshi is a winner in the hearts of investors. The majority of people have a cognitive bias with decimals and fractions, so holding millions of satoshis rather than 0.01 BTC can be more psychologically satiating for Bitcoin owners.
This concept is not new, it is found in particular on the labels with the round prices of the shops. In its logic of adoption, Bitcoin would therefore benefit from using its subunits of measurement. Although the denomination is different, investing in Satoshis is investing in Bitcoin.
The subunits already used by lovers of bitcoin and other cryptocurrencies
The term is already a reference for the community since on the Lightning Network (an alternative protocol to the standard Bitcoin network) users can carry out transactions in satoshi. Also, in the same way as bitcoin, a Satoshi can also be converted to other cryptocurrencies, on a platform provided for this purpose.
Although the term has been used for several years, Satoshi still does not have a symbol unlike Bitcoin and its logo (฿).
Bitcoin was the first to develop this kind of concept as the first cryptocurrency, however it is not the only one to be split into subunits. Ethereum, the second cryptocurrency in the ranking, is divided into Wei. This unit is named after Wei Dai, one of the early developers of Ethereum and also a pioneer in the cryptocurrency industry with b-money. For Ethereum, this unit is mainly used to calculate the gas costs, necessary for each transaction.
In view of the evolution of the value of cryptocurrencies in recent years, subunits such as satoshi could become a reference in the future. If the price of Bitcoin continues to rise, people will probably use satoshi or something other than BTC for their Bitcoin transactions in the future.