Sats bitcoin meaning

Satoshis or “Sats” are the smallest possible units of Bitcoin.

What Are SATS?

As Bitcoin’s value grew, the necessity for a smaller unit that would enable micro-transactions arose. This led to the widespread adoption of satoshis as a standard reference, especially for minute transactions. So what is it?

A satoshi, often abbreviated as “sat”, is the smallest possible denomination of Bitcoin. This term was coined after the pseudonymous Bitcoin creator(s), Satoshi Nakamoto. A single sat is typically equivalent to 0.00000001 BTC. In other words, one Bitcoin is equivalent to 100 million sats. 

Notably, a satoshi can further be subdivided on the Lightning Network into millisatoshis, where one millisatoshi equates to one-thousandth of a single satoshi or 100 billionth of a single Bitcoin. However, this does not apply to the Bitcoin network itself since the protocol defines that one Bitcoin cannot be split beyond 100 million units.

How Do Satoshis Work?

Technically speaking, satoshis represent the concept that a digital currency, just like fiat money, can be subdivided into smaller, more manageable units. This divisibility facilitates micropayments, making Bitcoin more practicable and accessible for daily expenses. It also means smaller investors with limited financial resources can buy fractions of Bitcoin as opposed to a whole Bitcoin. Therefore, when you buy a fraction of a Bitcoin worth $20, you are purchasing satoshis.

What’s more, satoshis serve as the standard unit of measurement. A majority of Bitcoin explorers and wallets, for instance, display transaction fee rates in terms of satoshis per vByte (sats/vB) when expressing Bitcoin transaction’s mining fees. For example, instead of saying the price of a product is worth 0.00045 BTC, you could express it as 45,000 satoshis, which is more readable and manageable for the everyday user.

In short, satoshis are to Bitcoin what cents are to the US Dollar or what pennies are to the Pound Sterling.

Other Bitcoin Denominations

Other noteworthy Bitcoin subdivisions besides the satoshi include:

• Decibitcoin (bBTC) – 1 dBTC is equivalent to 0.1 BTC or 10 million sats
• Centibitcoin (cBTC) – 1 cBTC is worth 0.01 BTC or 1 million sats
• Millibitcoin (mBTC) – 1 mBTC equals 0.001 BTC or 100,000 sats.
• Microbitcoin (uBTC) – 1 uBTC is equivalent to 0.000001 BTC or 100 sats.

Finney – 1 Finney is worth 0.0000001 BTC or 10 sats.