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SATS - Satoshi Explained

Sats stands for Satoshis, the smallest unit of bitcoin (BTC) recorded on the blockchain. One Satoshi (sat) is equal to 0.00000001 BTC or one hundred millionth of a Bitcoin.

We should begin by paying homage to the still anonymous man, woman, person or group of people known as Satoshi Nakamoto.

Satoshi Nakamoto was the inventor of Bitcoin, the very first decentralised digital currency. As Bitcoin has exploded in value since its inception in 2009 there has naturally been a need for a fractional form of bitcoin.

The world of crypto is not like the world of traditional retail that we have grown accustomed to, where something might cost €99.99 or a transaction fee might be €0.99.

We don’t usually pay €99.833453234 or €0.00000031, but in crypto land it’s common. Therefore, the concept of a highly fractional sat is needed to break down a single bitcoin into much much smaller units that could be used to pay small transaction fees for example.

The expected growth of bitcoin

Satoshi Nakamoto and the bitcoin community at large realised very early on that if bitcoin took off in a big way it could really explode in value.

The expected growth in value was also based on the fact that bitcoin would always be in limited supply, 21 million bitcoins to be precise, worldwide.

No more could ever be produced. This ultimate scarcity would play its part in increasing and maintaining value in something that you can’t actually see or touch like gold, silver, diamonds or even paper notes or coins and furthermore doesn’t have any government backing or collateral behind it.

So far the plan has worked incredibly well. Bitcoin continues to grow in value and has even spawned an entire crypto industry, although in 2023 things are a bit bumpy to say the least!

A fraction of bitcoin was going to be needed

Satoshi Nakamoto no doubt figured that if bitcoin grew in value as expected then tiny fractions of a bitcoin would be needed to pay for smaller transaction costs or who knows, maybe even a cup of coffee one day.

As it stood on 3rd August 2021, one bitcoin was worth 39,278.77 USD. You can immediately see the problem that Satoshi Nakamoto saw.

A single bitcoin could easily pay for a pretty nice BMW car back then. With this in mind, Satoshi Nakamoto came up with a fractional unit of bitcoin called a sat.

Originally it was suggested that one Satoshi would be one-hundredth of a bitcoin but eventually, the crypto community settled on one hundred millionth of a bitcoin (0.00000001 BTC) and this has turned out to be a pretty wise decision as it happens.

Think of the sat as we see cents, euro cents and pence in fiat currencies like the USD, EUR or the GBP. Again, looking at today’s bitcoin value, two decimal places as is common in fiat currencies simply wouldn’t cut it.

Imagine, even the equivalent of a single dollar cent in bitcoin terms would be equal to 392.78 USD today, that’s one expensive cup of coffee!

So the idea of a hundred millionth fraction of a bitcoin is something pretty genius as was the blockchain and bitcoin that Satoshi Nakamoto originally invented.

Satoshi, Satoshis, Sat or S and the Millisatoshi

The plural form of Satoshi can be Satoshi or Satoshis, or sats or s in abbreviated form. There is even a Millisatoshi, which is a hundred billionth of a single bitcoin that is used for example by payment channels to record very very small granular payments.

Sats provide easier and more affordable entry to the world of bitcoins

There are also other very important uses of sats in the crypto world. As bitcoin is, let’s face it nowadays, pretty expensive, if sats didn’t exist one would need quite a bit of money saved up just to buy a single bitcoin.

Not everybody has tens or hundreds of thousands of euros or dollars laying around collecting dust and furthermore, transaction fees require an ability to charge very small amounts.

With sats, however, you can purchase tiny fractions of a bitcoin, sats, and these sats are every bit as good as bitcoins.

Just like with fiat currencies, one hundred, one-cent coins are exactly as valuable as a single one-euro coin. In much the same way individual sats are just as legit and valuable as full bitcoins.

Sats into the future

Just because we are used to hearing about bitcoins, we shouldn’t forget about sats as they are actually way more practical, usable and accessible.

Assuming that bitcoin will continue to grow in value into the future the sat will no doubt become as well known as bitcoin itself and one day maybe every day people will be more used to talking about sats rather than bitcoins themselves.

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