A satoshi is to Bitcoin what cents are to the dollar or pence to the pound – simply the smallest unit or denomination of the digital currency. 100 million satoshis make up one whole Bitcoin. This means that one satoshi is worth 0.00000001 BTC.
The currency code for Satoshis is ‘sats’, which is why you may have heard people in the bitcoin community talking about ‘stacking sats’. Stacking sats just means to grow the amount of satoshis you have or to buy more bitcoin.
Where did the term Satoshi come from?
Satoshis are named after Bitcoin’s anonymous creator or creators, Satoshi Nakamoto, However, Nakamoto did not invent the concept or name it themselves. The term satoshi was not actually introduced as a name for fractions of a Bitcoin until 2011 and took some time to catch on.
The idea was first conceived on 15 November 2010, on a public forum for blockchain enthusiasts called BitcoinTalk. A user going by the name Ribuck proposed that 1/100 Bitcoin (0.01 BTC) should be referred to as a satoshi. Initially, the suggestion didn’t gather much support until February of the following year when a new thread picked up on the benefits of naming the smaller units for adoption. Thus, the satoshi was born.
Why use satoshis?
As outlined in its whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System, Nakamoto’s vision for digital money that can be spent independent of a centralised third party overseeing every transaction is made possible by dividing Bitcoins into these fractions.
You don’t need to buy one whole Bitcoin to enjoy its benefits and can purchase as much or as little as you wish. And, although neither Bitcoins nor satoshis have any connection to traditional currency pairings, you still have the ability to convert them back into fiat currency using cryptocurrency exchanges like Luno.
Is Bitcoin the only cryptocurrency that can be broken down into smaller units?
No, other popular cryptocurrencies like Ethereum (ETH), provide a similar smaller unit referred to as wei, named after Wei Dai, an early cryptocurrency developer and cypherpunk.