Satoshi

The smallest unit of Bitcoin is called Satoshi, named after the founder of Bitcoin, Satoshi Nakamoto, and is equivalent to one millionth of a Bitcoin. Bitcoin can be divided into smaller units to facilitate smaller transactions. There are 100 million satoshis (sats) in one Bitcoin, which means each satoshi is worth 0.00000001 BTC. In order for a Satoshi to be worth a penny, 1 Bitcoin needs to be worth $1 million. But as of early 2022, one satoshi is worth less than one-twentieth of a cent.

“Satoshi” is not the only subdivision of Bitcoin. A millibitcoin is the term for one thousandth of a Bitcoin, or 0.001 BTC. A Micro Bitcoin is one millionth of a Bitcoin or 0.000001 BTC. On the Lightning Network, transactions can be made using units smaller than a Satoshi. Known as a millisatoshi, it represents one thousandth the size of a single satoshi, but this is not available on the Bitcoin network itself.

Using terms like satoshis or other small units means users don't have to write out strings of zeros when it comes to very small amounts of cryptocurrency. Therefore, dividing Bitcoin into parts is necessary to facilitate microtransactions, such as for purchasing goods such as coffee. Although Bitcoin is not considered a suitable medium of exchange due to its high volatility, Satoshis have become indispensable ever since a single Bitcoin was worth tens of thousands of dollars. This also means potential investors can buy as little as $1 worth of Bitcoin without having to purchase the entire coin.

Since Bitcoin's block rewards are halved approximately every four years, new coins minted every 10 minutes will at some point be measured in Satoshis instead of Bitcoins. The minting of new Bitcoins will eventually have to stop sometime in the next century because of the existence of Satoshis. It is impossible to continue minting new Bitcoins in smaller and smaller amounts forever.