How Is Bitcoin Broken Down?

Bitcoin image

A currency has to be dividable or it’s not practical. For example, the Euro. It’s dividable into bigger units, 10,50,100 and smaller units 0.1 or 0.01. That is one of the most important factors of a currency. If it’s not divisible, it’s not suitable for a currency.

So, is Bitcoin divisible?

Yes, Bitcoin is divisible into smaller denominations. You can do that to make it suitable for trading it against goods and services. The smallest denomination is 1 satoshi. On the Bitcoin lightning network, you can divide 1 satoshi even further. For instance, millisatoshis.

You don’t have to buy or hold 1 whole Bitcoin. You can only hold a few satoshis if you want to.

All Bitcoin denominations

DenominationBitcoin unitsValue (BTC)
SatoshiSAT0.00000001 BTC
MicrobitµBTC0.001 BTC
MillibitmBTC0.01 BTC
CentiBitcBTC0.1 BTC
BitcoinBTC1 BTC
DecaBitdaBTC10 BTC
HectoBithBTC100 BTC
KiloBitkBTC1000 BTC
MegaBitMBTC1 000 000 BTC

The terms satoshi and Bitcoin is used the most. The term satoshi is used by most people because of altcoins (alternative coins). They are all traded against Bitcoin. Bitcoin is worth thousands of dollars. Most altcoins are worth even less than 1 dollar. So, the price for one altcoin is only a few satoshis.

What is the smallest amount of Bitcoins you could own?

The smallest amount you could own is 1 satoshi or 0.00000001 BTC. You would not be able to do anything with it. You have to pay transaction fees to miners if you want to transfer the one satoshi to another address.

However, there is also another solution to send the 1 satoshi. You could send the transaction with a zero transaction fee.

That only works if you have full control over the Bitcoin wallet. If you use an exchange wallet, you have to pay most of the time a fixed amount of transaction fees. Miners have no incentive to prioritize a zero-fee transaction. Depending on how busy the network is, your transaction can be stuck for days. Sometimes, even longer before it gets included in a block.

What is the largest amount of Bitcoins you could own?

You could own 21 million BTC because that is the largest supply of Bitcoin. You would not be able to do that. Most Bitcoins are lost and some people don’t want to sell their coins yet.

For one wallet or address, there is no greatest amount of BTC (besides the 21 million limits) it can own.

What is the smallest denomination of Bitcoin?

The smallest denomination of Bitcoin is Satoshis. If we would need smaller denominations, we could divide one satoshi even further. This would be appealing if the value of 1 satoshi would be too big, for instance, 1 dollar.

Let’s say the value of 1 satoshi is 1 dollar. Because a satoshi is the smallest denomination, you can’t divide it anymore. In other words, it means you can’t pay less than 1 dollar.

The Lightning network makes it possible to divide satoshi even further into millisatoshis. The purpose of the Lightning Network is to handle microtransactions. So, it makes sense to divide satoshis even further, if there is a need to do that.

The Lightning network and the mystery of the one millisatoshi

A quick explanation of what the lightning network is

The lightning network is the 2nd layer on top of the Bitcoin blockchain. It is used to make microtransactions cheaper and faster on Bitcoin.

The concept behind it is simple. For educational purposes, I simplified the concept, but you can imagine it like this. You load up a Lightning account with a specific amount of BTC you choose. Afterward, you can pay with that amount on the Lightning network.

The lightning network is another protocol. Transactions on the lightning network are not submitted on the blockchain. Because of that, transactions are cheap and near-instant.

Why you can divide Satoshis into millisatoshis on the Lightning network

You can also divide satoshis even further on the lightning network. It operates through the lightning network standard/protocol. Because of that, you can divide satoshis even further, for instance, into millisatoshis.

The purpose of the Lightning network is to do microtransactions on it. So, it makes sense to be able to divide satoshis even further.

1 milliosatoshi (mSAT) = 1000 Satoshis

The Lightning network can transact even with smaller units. If your Lightning account (channel) is closed, your BTC is broadcasted to you on the blockchain. The amount is rounded down to the nearest satoshi to adhere to Bitcoin limits.

Is it worth holding a fraction of a Bitcoin?

It results in the same thing as holding 1 Bitcoin. Even if you only have a fraction of a Bitcoin, for instance, 1 satoshi. The only thing that changes is the value you hold. If you have more Bitcoins, you own more value.

But, holding only a few amounts of satoshis is not worth it. If you want to make a transaction, you have to pay at least a few satoshis. To be included in the next six blocks, you need to pay currently 530 satoshis to miners (0.0000053 BTC).

You could risk it and pay zero transaction fees. On the other side, miners have no incentive to put your transaction into the next block. They prioritize others that pay at least a small amount. If you do that, you risk that your transaction is stuck for days. It could be even weeks before it gets confirmed.

It is recommended to hold at least 10000 satoshis to pay at least a small amount for transaction fees. If you do that, you have to wait a few hours, but not days or weeks. 

Further Readings:

FAQ

How many satoshis are one Bitcoin?

100 000 000 Satoshis = 1 Bitcoin

Satoshis are the smallest unit in the Bitcoin protocol.

What is smaller than a Bitcoin?

The most popular unit that is smaller than a Bitcoin is one satoshi. There are also not so common ones, for instance, Microbit, Millibit, or Centibit.

Maximilian Groß

I'm a software engineer. I'm the owner of FireStake.com and know the crypto space since 2016. Furthermore, I share everything I learn about crypto on this blog.

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