With one bitcoin currently worth more than $6,000, we need smaller bitcoin units and denominations to make it work as a day-to-day currency. We explain the units, from one bitcoin down to one “satoshi” (or 1 hundred millionth of a bitcoin).
Let’s picture a future where you walk into Starbucks and buy a coffee with bitcoin. You can’t exactly pay with one full bitcoin. It would be like paying with a $10,000 note or handing over a gold bar.
For bitcoin to become a viable cash system, we need to break it down into smaller units and denominations.
Those denominations already exist, but they’re not yet widely used. Here’s how it breaks down, at a glance:
Bitcoin – 1 BTC
DeciBit – 0.1 BTC
CentiBit – 0.01 BTC
MilliBit – 0.001 BTC
MicroBit – 0.000001 BTC
“Finney” – 0.0000001 BTC
“Satoshi” – 0.00000001 BTC
A “Satoshi” is 1 Hundred Millionth of a Bitcoin
The smallest bitcoin unit is called a Satoshi (or a “Sat,” for short). It’s named after Bitcoin’s mysterious founder, Satoshi Nakamoto. At the time of writing, 160 satoshis are worth about one cent.
But why would such a tiny denomination exist?
Well, it gives you a sense of how big the bitcoin community expects the cryptocurrency to grow. One satoshi is expected to be a usable form of currency one day, perhaps similar to a penny.
Only 21 Million Bitcoins Will Ever Exist
We also need to break bitcoins into tiny units because there will only ever be 21 million of them.
Compare that to the 10 trillion dollars in existence and you start to see why bitcoin needs many denominations.
There simply aren’t enough full bitcoins for each person to own 1 BTC. (In fact, there are more people living in Shanghai than there are bitcoins).
In other words, if bitcoin becomes a true global currency, only a very small group of people will own a full bitcoin. The rest will own and spend much smaller units and denominations.
The “Finney” is a Nod to Hal Finney
Hal Finney was one of the first people to work on Bitcoin besides Satoshi Nakamoto. In fact, many have claimed that Hal Finney is Satoshi Nakamoto, but he has always denied the claim.
Although the finney is not an official denomination, it’s often used by the community as a nod to his work on the project.
Should We Stop Using the Term Bitcoin?
Some have argued that “one bitcoin” is an intimidating way to introduce new people to the cryptocurrency.
Buying one bitcoin at more than $6,000 sounds pretty overwhelming to most people.
At the same time, pricing a coffee at 0.001 BTC (roughly the cost right now) is ridiculous. Instead, you might say that one coffee costs a milliBit, or colloquially an “emBit”.
Or you might feel more comfortable investing in a deciBit (about $600) or even a centiBit ($60).
How Much is Each Bitcoin Unit Worth?
At today’s price, the denominations are worth the following:
Bitcoin – $6,340
DeciBit – $634
CentiBit – $63.40
MilliBit – $6.34
MicroBit – $0.06
“Finney” ~ half a penny
“Satoshi” ~ 160 satoshis to a penny.
Prices correct at September 19th, 2018.