Bitcoin can be broken down into many fractions with the smallest of them called a ‘Satoshi’ named after the creator of Bitcoin, Satoshi Nakamoto. One Satoshi is equivalent to 0.00000001 of a whole Bitcoin. This is 8 decimal digits. This is the smallest denomination the system can currently handle. There is also quite a list of different denominations. For that reason I will not name them all but I will list some so we get the idea.
Name of unit Abbreviation – Amount of Bitcoins
- Mega-Bitcoin MBTC 1,000,000 whole Bitcoins
- Kilo-Bitcoin kBTC 1,000 whole Bitcoins
- Hecto-Bitcoin hBTC 100 whole Bitcoins
- Deca-Bitcoin daBTC 10 whole Bitcoins
- Bitcoin BTC 1 whole Bitcoin or 100 million Satoshi’s
- Deci-Bitcoin dBTC 0.1 of a Bitcoin or 10 million Satoshi’s
- Centi-Bitcoin cBTC 0.01 of a Bitcoin or 1 million Satoshi’s
- Milli-Bitcoin mBTC 0.001 of a Bitcoin or 100,000 Satoshi’s
- Micro-Bitcoin μBTC 0.000001 of a Bitcoin or 100 Satoshi’s
- Satoshi Sat 0.00000001 of a Bitcoin or 1 Satoshi
Bitcoin is not infinite. There is a limit. The limit is 21 million Bitcoins. So although the above numbers seem a little crazy and useless there is method to the madness. Let’s look at this simple equation to see why these numbers are required.
Earth’s population as of 2017 was 7.53 billion. The total amount of Bitcoin that will be in circulation by the year 2140 will be 21 million. If you divide these two numbers you come to an answer of 358.5714285714286. Or roughly 1 Bitcoin for every 358 people. This is not taking into account that 30 to 50% of the current coins in circulation are already lost due to a number of reasons including lost private keys and lost or broken hard-drives. That means the total coins lost forever is somewhere between 2.56 million and 3.56 million. Then you have ‘Whales’ or owners of large quantities of Bitcoin who collectively own in excess of 5 million coins. If we extrapolate these numbers and really think of the amount lost from now till the year 2140 you can see two things clearly. One is that a whole Bitcoin will be incredibly rare and two there is definitely a need for these smaller denominations.