What Is SATS Crypto?

Bitcoin’s (BTC) leading market position and high trading volumes are partially a result of BTC being the first cryptocurrency in the world, but the fact that its blockchain network is so reliable and secure is definitely another key factor behind Bitcoin’s popularity. When BTC was introduced back in 2009, it was a really revolutionary step in the field of financial instruments because the concept of decentralised, digital cash totally defied fiat currencies and the traditional financial system. 

Back then, stockbrokers and financial experts regarded BTC as something that wouldn’t stand the test of time. Many professionals from the traditional financial industry even went so far as to label BTC as a scam and Ponzi scheme. Despite all the negative publicity, BTC’s popularity steadily grew throughout the years, with its core development team regularly implementing software updates to further improve the BTC blockchain and its functionalities.

Physical bitcoin cryptocurrency

Less than a year after the launch of BTC, the developer team that took on the responsibility of maintaining the project after Bitcoin’s founder Satoshi Nakamoto retired decided to introduce satoshis (SATS) as a metric for splitting a single Bitcoin into smaller denominations.

Let’s take a look at how the Bitcoin blockchain works in order to understand why the introduction of SATS was so important for the asset.

Bitcoin – The First Cryptocurrency

Bitcoin is the pioneer of blockchain technology and cryptocurrency. Since there weren’t any digital currencies before BTC, the Bitcoin blockchain was a kind of experiment to see whether the concept of digital cash would hold ground as a financial instrument. The main concern of early crypto adopters was whether the BTC blockchain is secure and what will give value to Bitcoin.

The value of BTC, just like any other crypto, largely depends on the utility of the coin and its popularity. The more people accept BTC as a digital asset, the higher the price of the coin. As far as utility goes, the main issue that BTC managed to solve was the possibility of sending fast money transactions between any two digital locations in 5 to 10 minutes. This was a serious step forward in terms of transaction speed compared to bank account transfers, which can take hours or even days. Also, users could always track their transactions through the blockchain, which is something they couldn’t do with bank transfers.

Blockchain technology enabled this through the Proof of Work (PoW) mechanism. This mechanism requires Bitcoin network nodes, operated by miners, to validate and process each transaction through the blockchain. Since no central authority validates transfers on the BTC blockchain, that role is delegated to the miners in exchange for a transaction fee and some freshly mined BTC. The miner fees and the block reward of fresh BTC are all counted in SATS. A satoshi is the one hundredth millionth part of a single Bitcoin. 

When a miner picks your transaction up from the memory pool for further processing, they select your transfer based on the transaction fee you’ve attached. If you choose a lower than average transaction fee, it will take much more time to process your transfer, compared to an average or above-average fee. Before submitting your transfer, you should always check the current average amount of SATS included in a transaction fee using calculator platforms like Bitcoinfees.net.

Satoshis Explained

One Satoshi represents one hundred millionths of a Bitcoin, the smallest Bitcoin unit. The name is a homage to Satoshi Nakamoto’s role in the launch of Bitcoin. Back in 2010, when SATS were introduced, these metrics didn’t seem so important because BTC was barely worth a few USD. However, this turned out to be a smart move because as the popularity and price per BTC grew, so did the need for a more convenient method of displaying balances in fractions of a Bitcoin. 

Small amounts of bitcoin satoshis

That’s when SATS became extremely useful for both individual traders and crypto exchanges since they could display a BTC fraction with just a few digits instead of listing numerous zeros and making quite complicated calculations with 8 decimal numbers (e.g. 0.00000001 BTC). It’s far easier to just write 1 SATS instead.

When you’re setting a transaction fee, many crypto wallets enable users to manually choose the amount of SATS they are going to include as an incentive for miners. It’s easier to understand how much cash you include as a transaction fee if you break a single BTC’s value into smaller denominations.

Most popular cryptocurrency exchange platforms, such as Coinbase, show the price of available crypto both in USD and BTC value broken up into SATS. Crypto market tracking websites like Coinmarketcap also use the BTC/SATS metrics to display the price of cryptocurrencies on the market. Generally, a lot of crypto platforms, trending DeFi projects, and NFT markets offer users the option to display prices in BTC, SATS, or Ethereum (ETH) as the second-largest crypto asset on the market.

SATS are especially useful nowadays when the price of a single BTC is measured in several tens of thousands of US dollars. If it weren’t for SATS, you’d need to write a lot of zeros when calculating the price of the crypto you wish to buy or sell in bitcoins.

A Few Ending Words…

The BTC developer team had no way of knowing that Bitcoin was going to reach an all-time high of nearly 70,000 USD, with a market cap worth hundreds of billions of USD, so we should surely be thankful for their visionary decision of breaking up BTC into smaller units. Bitcoin’s position as the crypto market leader is far from being over, and the dramatic price rises and corrections that are accompanying Bitcoin are just another sign that SATS are definitely very useful for making calculations when dealing with crypto.