A satoshi or SAT is the smallest unit held within a Bitcoin or BTC. Much like what the cent is to the dollar or what the penny is to the pound, the satoshi functions as a means for conducting trade at a more numerically complex level.
Bitcoin has the following unit structure:
1BTC is equal to 1,000 mililbitcoins (mBTC)
1,000mBTC is equal to 1,000,000 microbitcoins (uBTC)
1uBTC is equal to 100,000,000 satoshi (SAT)
Named after the elusive creator or creators of Bitcoin, Satoshi Nakamoto, the satoshi is the hundredth millionth of a whole Bitcoin. Originally the satoshi was intended to be valued at a hundredth of a bitcoin. However, once the value potential of Bitcoin became obvious, it became clear that a far smaller unit of trade was necessary. As the value of Bitcoin went up, specific units of BTC would become increasingly unwieldy in terms of smaller trades or trading costs, sometimes referred to as ‘Gas.’ And as such it was decided that the hundredth millionth per SAT, was far more useful to the function of the coin. At the time of writing a single dollar USD, is sitting at the value of 1,624 SATs.
- Bitcoin price must hit $1 million for 1 satoshi to reach parity with 1 cent
For Bitcoin to reach a level of parity with USD, the value of one Bitcoin would have to increase to somewhere in the league of 1million USD. This would theoretically pair the satoshi with the cent. While still seeming like something of a tall order in terms of value hiking, many have pointed out that the closer BTC comes to parity with the dollar, the more attractive it may become to new investors.
There have been those who criticize Bitcoin for its alleged indivisibility. However, the satoshi stands in clear opposition to this misconception. As the SAT allows for numerically complex trades and evaluations to take place. Some statisticians have also pointed out that a further level of emphasis upon the SAT will reframe the conception that the bar for entry into BTC trade is too high. In this sense, the Satoshi is becoming an increasingly viable standard of trade for cryptocurrency users.