Blockchain & Cryptocurrency Glossary

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Satoshi

1 min read
Pronunciation
[suh-toh-shee]
Analogy
If a bitcoin is like a dollar, then a satoshi is like a cent—the smallest practical unit of the currency. Just as you wouldn't say '0.01 dollars' but rather '1 cent', bitcoin users often count in satoshis rather than decimal fractions of a bitcoin for small amounts.
Definition
The smallest unit of Bitcoin, equal to 0.00000001 BTC (one hundred millionth of a bitcoin). Named after Bitcoin's pseudonymous creator, Satoshi Nakamoto, this denomination enables precise transactions and price representation for small amounts.
Key Points Intro
Satoshis provide the practical denomination for everyday Bitcoin transactions and price precision.
Key Points

Equal to one hundred millionth (10^-8) of a bitcoin.

The base unit used in Bitcoin's codebase for all calculations.

Written as 'sat' or 'sats' in abbreviated form.

Enables precise measurement of Bitcoin value for microtransactions.

Example
A coffee might cost 0.0004 BTC, but Bitcoin users and applications typically display this as 40,000 satoshis (or 40k sats), providing a cleaner, more intuitive representation particularly as Bitcoin's value increases.
Technical Deep Dive
At the protocol level, Bitcoin exclusively processes amounts in satoshis as integers, avoiding floating-point precision issues. All transactions, UTXO values, and fee calculations use satoshis as the base unit. While the theoretical smallest unit is defined at the protocol level, some Layer 2 solutions and sidechains have implemented millisatoshis (thousandths of a satoshi) to enable even smaller payments for micropayment channels. The term 'satoshi' wasn't in the original Bitcoin whitepaper but was adopted by the community to honor the creator and provide a convenient denomination for small amounts, similar to how 'wei' serves as Ethereum's base unit.
Caveat
While satoshis are technologically sufficient for today's use cases, if Bitcoin's value increases substantially in the future, even smaller denominations might become practical necessities. Some Layer 2 solutions already implement millisatoshis (msat), though these subdivisions only exist off the main Bitcoin blockchain.
Related Terms
Bitcoin
Wei
Gwei

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