Satoshi Explained

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Luisa Rollenhagen

Luisa Rollenhagen is a writer and editor who lives in Berlin.

If you’ve spent any time in the realm of cryptocurrency—or had your ear talked off by a crypto-enthusiast—, then you may have heard the term “Satoshi” fall a couple of times. Satoshi both refers to the person who allegedly invented bitcoin, the most famous cryptocurrency there is, and an actual unit of bitcoin.

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What is a satoshi?

Bitcoin has been having a moment for quite some time now, and unless you’ve been living under a rock, you’ve probably heard the stories of overnight millionaires, spectacular rising prices, and even more spectacular losses. There are many reasons why investors should be careful about investing in Bitcoin, chief among them being the fact that bitcoin is still a wildly speculative asset that doesn’t have the steady history of reliable performance that a blue-chip company would have. Nonetheless, cryptocurrencies like Bitcoin can be an exciting addition to a well-diversified portfolio, and interested investors are no longer relegated to the Dark Web in order to find reputable trading platforms.

The current price of one bitcoin is 13,578 USD. That’s obviously quite a bit, and people buying or paying with bitcoin are probably going to be working with fractions of a bitcoin. That’s where smaller denominations come in: They help split bitcoin into smaller units and make transactions way easier. And since all transactions involving bitcoin are conducted online and are encrypted, smaller units help make these transactions more readable and understandable.

How much is a satoshi worth?

A satoshi is worth one hundred millionths of a bitcoin. The general unit structure of bitcoins is as follows: 1 bitcoin (BTC) is equivalent to 1,000 millibitcoins (mBTC), 1,000,000 microbitcoins (μBTC), or 100,000,000 satoshis. So if one bitcoin is currently trading at 13,578 USD, one satoshi is about 0.0001332797 USD. That’s not that much! Which is why satoshi are perfect for managing smaller transactions.

Satoshi vs Satoshi Nakamoto

The unit satoshi is named after the alleged creator of bitcoin, Satoshi Nakamoto. We say “alleged” because the man is shrouded in mystery—there’s even some debate as to whether “Satoshi Nakamoto” is just one person or a group, operating in the shadows. The lore adds a lot of mystery to bitcoin’s appeal.

Here’s the most common version of the story: It’s 2009, and the world is still reeling from a global recession that tanked markets. The vacuum left in the wake of big bank defaults has inspired a push for innovation that favours decentralisation and cuts out the meddling financial sector, which has fallen into disfavor after being seen as the main culprit of the global crisis. According to modern legend, that’s when a Japanese man named Satoshi Nakamoto appeared online and, with nothing more than several thousand lines of code now known as the “genesis block,” created bitcoin.

Late into 2008, Nakamoto had already caught the attention of coders, computer scientists, and crypto enthusiasts by publishing the bitcoin white paper, entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This manifesto of sorts outlined how a decentralized peer-to-peer currency network could revolutionize the way financial transactions were carried out. Through a process called the blockchain, each bitcoin transaction would be recorded on a public ledger that contained the information of all previous transactions, recorded in so-called blocks that were linked together. This way, transactions were transparent, and users could avoid double-spending, a glitch in which a digital token is accidentally spent more than once.

Bitcoin has had a significant impact on how people think about privacy and accountability when it comes to financial transactions. Many investors also see cryptocurrencies as a type of inflation hedge that serves as a back-up to investing in more traditional currencies. Either way, anyone interested in investing in cryptocurrencies should make sure they’ve done their homework and ensure that cryptocurrencies are the right choice for them.

Last Updated December 16, 2020

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