What does Sats mean in Crypto? Sats in Crypto, is short for Satoshis, is the smallest unit of Bitcoin (BTC). One Sats/Satoshi equals one-hundred-millionth of a Bitcoin or 0.00000001 BTC.
Example: If Bitcoin’s price ever goes to the moon, then every Sat you own matters!
At the time of writing, Bitcoin is trading at about $48,000 per BTC, thus, one Sats/Satoshi is equivalent to $0.00048. If Bitcoin hits the $1 million mark, one Sats/Satoshi will be worth $0.01.
Sats/Satoshi takes its name from Bitcoin’s pseudonymous creator, Satoshi Nakamoto. It is the smallest fraction of a Bitcoin that we can send.
Just as the existing fiat currencies, Bitcoin, as well as other cryptocurrencies, can also be divided into smaller units. But unlike the physical version of global currencies such as the US dollar, which can be divided into 2 decimal places, a Bitcoin is divisible into 100 million units called Sats/Satoshi.
In fact, all amounts on the Bitcoin blockchain are denominated in Satoshi, but they are typically converted to Bitcoin by most trading platforms for easy readability.
Bitcoin Divisibility for Micropayments
To become a global medium of exchange, a currency needs to be divisible into smaller units. For Bitcoin, among other cryptocurrencies, smaller fractions are vital to ease and facilitate transactions for very specific amounts, such as transaction fee payments and micropayments.
If the protocol restricts it to just two decimal places, that would make Bitcoin impractical for everyday transactions – 0.01 BTC can be worth thousands of dollars.
Also, Bitcoin’s divisibility is crucial for it to accurately reflect the value of every good or service available in the economy, providing Bitcoin a high amount of liquidity if Bitcoin’s price rises. For example, investors can begin investing in Bitcoin, or other cryptocurrencies, with fractional amounts. Purchasing $1,000 worth of Bitcoin is just as easily as purchasing an entire coin.
Other units of denomination of a Bitcoin also exist, such as millibitcoins (mBTC), and microbitcoins (μBTC). So, 1 Bitcoin is equivalent to 1,000 mBTC, 1,000,000 μBTC, or 100,000,000 Satoshis.
As a side note, different coins use different terms to describe fractions of a coin. For Ether (ETH), the native token of the Ethereum blockchain, the smallest unit is a wei. Every ETH is 1,000,000,000,000,000,000 wei. To simplify, amounts in fractions of ETH typically deal with in Gwei (1,000,000,000 wei, or 0.000000001 ETH).