Bitcoin’s price has long surpassed the $10,000 mark, making one coin seem like a fortune to the average user. Many believe that buying Bitcoin requires substantial funds, which seems out of reach for ordinary people.
This is probably the biggest misconception about Bitcoin. You only need a very small amount to become an owner of the cryptocurrency.
Bitcoin Divisibility
You likely know that money has several essential characteristics, one of which is divisibility. In simple terms, this means a dollar can be divided into 100 cents, and 50 cents plus 50 cents always equals 1 dollar.
Traditional currencies are typically divided into 100 parts: 100 cents in 1 dollar, 100 kopecks in 1 ruble. If a financial transaction results in fractions of cents or kopecks, they are rounded up or down. This happens because state currencies must have a physical form.
With cryptocurrencies, things work differently since they have no physical component. Therefore, cryptocurrencies can be divided not into 100, but into many more parts.
Bitcoin “Pennies” and “Coins”
The smallest unit of Bitcoin is called a satoshi, named after its creator Satoshi Nakamoto. One Bitcoin contains 100 million satoshis.
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However, that’s not all. Similar to cent coins (5 cents – nickel, 10 cents – dime, 25 cents – quarter), Bitcoin is also divided into various “coins”.
- Starting from the smallest, the next unit is 100 satoshis, denoted as μBTC and called a microbitcoin or ubit.
- Next is 100,000 satoshis – a millibitcoin or mBTC.
- Then come the traditional hundredths – 0.01 Bitcoin (1 million satoshis), known as a bitcent or cBTC.
Few people are familiar with these names – and this is a significant drawback in Bitcoin’s adoption. Whole numbers are much easier for most people to grasp than decimal fractions.
Why Divide Bitcoin into Parts
Bitcoin was conceived by Satoshi Nakamoto as an alternative to all existing money, with its advantages and without inherent flaws (like inflation and unlimited issuance).
According to “crypto evangelists,” cryptocurrencies should soon replace fiat currencies, becoming the sole means of payment. Their high divisibility enables use not just for exchange trading, but also in services, retail, and more.
No one knows the limits of Bitcoin’s price growth, but if the boldest forecasts come true and Bitcoin reaches $1 million, its division into 100 million satoshis will still allow small purchases, like buying ice cream at a café.
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And even if Bitcoin’s price skyrockets to unimaginable levels, changes can be made to its code to allow even greater divisibility if needed.
