When Bitcoin (BTC) was first invented, buying a couple of these digital assets wasn’t such a big deal. The cryptocurrency didn’t have a huge global market as it does today, and only a few geeks – who are potentially jaw-droppingly rich right now – were transferring Bitcoin back and forth between themselves, mostly for the sake of it.
Back then, Bitcoin’s price wasn’t as exorbitant as it is today, and there was no need to divide a token into smaller units to purchase the asset. If you told Laszlo Hanyecz, the crypto enthusiast who famously paid 10,000 BTC for two pizzas on May 22nd, 2010, a single Bitcoin would be worth tens of thousands of dollars in just a decade, he would probably choke on the margarita he was eating.
Although Bitcoin has always been divisible, it wasn’t a big problem to buy a couple of BTC when it cost only several dollars or less. Today, buying 1 BTC is beyond the reach of many investors. Instead, most people simply buy fractions of Bitcoin, calculated in smaller units. If you’d rather not buy a whole Bitcoin yourself, keep reading to find out what’s the smallest amount of Bitcoin you can buy.
Table of Contents
A Brief History of Cryptocurrencies
If you are into Bitcoin and cryptocurrencies in general, you probably know that Satoshi Nakamoto published the Bitcoin whitepaper in 2008 and consequently mined the first Bitcoin block at the beginning of 2009. But the idea for cryptocurrencies predates Satoshi’s Bitcoin. During the late 1980s, people were already thinking and writing about decentralised peer-to-peer digital currencies.
For instance, in 1995, an American cryptographer, David Chaum, founded Digicash, an anonymous cryptographic payment system. Unfortunately, the Digicash project was ahead of its time and didn’t proceed further. Nick Szabo, an American computer scientist and a cryptographer, came up with Bitgold in 1998. Bitgold is widely regarded as the direct precursor of Bitcoin among the cryptocurrency community.
A decade after Szabo published his ideas for Bitgold, the Bitcoin creator Satoshi came up with the open-source, decentralised, peer-to-peer electronic cash system Bitcoin and set the cryptocurrency train in motion. Satoshi’s Bitcoin design owes a lot to the efforts of former cryptography developers we mentioned, especially when it comes to the public ledger he perfected, the algorithm behind Bitcoin mining and blockchain technology in general. All these names are credited in the Bitcoin whitepaper.
The Emergence of the Cryptocurrency Market
Cryptocurrency trading is a relatively new venture. Bitcoin didn’t get the wide global recognition it has today overnight. When Satoshi mined the first Bitcoin block in 2009, the block prize was 50 BTC, and it scarcely had any value for the first couple of years. Until 2011, Bitcoin price was less than a US dollar, and the asset wasn’t on the radar of many investors.
Buying Bitcoin wasn’t so straightforward at the time. When it was first released, the investors had only two options to obtain Bitcoin: arranging a peer-to-peer Bitcoin transaction or mining the asset themselves. While mining Bitcoin was relatively easier back then, it still required some technical skills. Investors who couldn’t mine it had to obtain it peer to peer, but this method was far from safe.
Mt.Gox crypto was founded in 2010, and several others such as VirWoX and Tradehill followed it. Mt.Gox was compromised in 2011 by an infamous hacker attack, causing a huge financial scandal for Bitcoin. The losses reached up to $460 million at the time.
We can say that Bitcoin’s first celebrity moment was April 2011, when Forbes published a story titled CryptoCurrency. That year, from April to May, the Bitcoin price rose to $8.89, increasing its value more than 10 times over, and continued to rise steadily over the years, even though it has always been subject to high volatility. However, the most infamous online black market of all time, the Silk Road, opened the same year, and it only accepted Bitcoin payments in return for illegal services and substances. This gave Bitcoin a bad name.
Compliance and Security
The cryptocurrency community must have learned from the mistakes of Mt.Gox, as many of the large exchanges did a far better job at prioritising security. Increasing regulations helped Bitcoin to be acquitted of being seen as a currency that enables criminal enterprises. Cryptocurrency trading is usually subject to Know Your Customer (KYC) and Anti Money Laundering (AML) regulations along with counter-terrorism financing laws. Even though cryptocurrency exchanges are still fighting off hackers, Bitcoin trading is getting safer and safer.
Plus, thanks to the rapidly evolving cryptocurrency market, there are many altcoins such as Ethereum (ETH), Bitcoin Cash (BCH), Ripple (XRP), Cordano (ADA), and more than 10 thousand others available to trade.
As you see, Bitcoin’s journey to becoming one of the most popular investment instruments had its ups and downs. However, thanks to all advancements in the field, today the Bitcoin price is measured in tens of thousands of dollars. But since one BTC is worth so much in terms of fiat currency, it is hard for some investors to purchase a whole Bitcoin.
How to Buy Bitcoin?
You might want to buy Bitcoin for various reasons. It could be used to make digital payments or as an investment asset. Buying Bitcoin may sound like a lavish purchase for some if you think about its soaring prices. But you never have to buy a whole Bitcoin. You can purchase smaller amounts of it according to your budget and your personal goals.
Find an Exchange Platform
Buying Bitcoin is a much simpler process than it was during the early years of the asset. The most straightforward and hassle-free method is purchasing Bitcoin on a cryptocurrency exchange.
There are hundreds of exchanges that you can use to buy, sell, and trade virtual currencies. All you need to do is to open an account on a Bitcoin exchange of your choice. You can check out our reviews on Coinbase, Coinspot, Coinjar, Kraken, Binance, and PancakeSwap to have a general understanding of the exchanges and their policies regarding security, transaction fees, and the storage of private keys. Once you set your mind on an exchange platform, you simply follow the steps for the registration process as outlined on the website of the exchange.
Connecting a Payment Method to Your Exchange Account
Once you are done creating an account on the exchange of your choice, connect a payment method to your account that allows you to deposit fiat money to the exchange. Depending on the exchange, you might need to provide your ID documents to complete a KYC procedure. This helps the platform to keep the marketplace safe from illegal activity.
When the ID verification is complete, you can deposit fiat money to your account through your bank account, credit or debit card, or PayPal.
Choose a Crypto Wallet
One of the most important steps when investing in cryptocurrencies is to keep your valuable digital currency safe. Keeping your investments on exchanges is never a good idea unless you need to cash out immediately. Hackers or malicious actors are constantly targeting crypto exchanges, so it’s better if you transfer your funds to a safer digital wallet.
There are different kinds of wallet options on the market, such as hot and cold wallets, custodial and non-custodial wallets. Hot wallets are crypto wallets that are connected to the internet. They typically come with an application, a browser extension, or a website. Some of them are custodial wallets, meaning the wallet service has your private keys, and you simply use a password to access your funds. The downside to custodial wallets is that you need to trust a third party with your assets.
Cold wallets are simply offline wallets like paper wallets or hardware wallets that come in the form of a USB device. Since your private keys are kept offline, they are safe from the prying eyes of thieves and hackers who are lurking everywhere online.
If you would like to have more info about crypto wallets, check out our reviews on Ledger Nano S, MyCelium, KeepKey, and Trezor. These reviews will give you a better understanding of the advantages and disadvantages of different wallet types and services.
Smaller Bitcoin Units
The smallest unit of Bitcoin is called a satoshi, after its mysterious founder’s name, which is equivalent to 0.000000001 BTC. A satoshi is one hundred millionth of a Bitcoin, and its value changes according to the market price of Bitcoin. So to get the satoshi to USD rate, all you need to do is to divide the current BTC price to 100 million.
Satoshi makes it easier to conduct transactions in the market without having to deal with decimals. Unfortunately, we don’t have an official lingo over fractions of Bitcoin yet. Satoshi caught on around 2010 after long discussions on Bitcoin forums. It is sometimes referred to as sat, which is just an abbreviation. It is possible to encounter different units for different denominations of Bitcoin across the internet. For example, bit is one of them, which refers to a millionth of a bitcoin.
Metric system is also used to denominate fractions of Bitcoin:
Millibitcoin (mBTC) = 100,000 satoshi = 0.001 BTC
Microbitcoin (µBTC) = 100 satoshi = 0.000001 BTC (also called bit)
According to a Reddit post, satoshis and bits are more widely adopted than mBTC and µBTC among the crypto community across the internet.
Why Do We Need These Denominations?
Thanks to the soaring Bitcoin prices, both traders and small-scale miners deal with very small fractions of Bitcoin. But mining or buying 0.005 of BTC can feel very small. Moreover, your eyes would be more prone to making mistakes while counting the number of zeros. For this reason, the community would potentially benefit from a specific vocabulary for smaller amounts of Bitcoin. Of course, there has to be a consensus among the community, exchanges, and Bitcoin-based businesses if such language is to exist.
A Few Words Before You Go…
Bitcoin is becoming more and more popular every day. Even though we don’t have a consensus over the measurements of Bitcoin fractions yet, we have satoshi to measure the smallest amount of Bitcoin. It already makes our lives easier when talking about Bitcoin fractions, which is inevitable with the sky-high Bitcoin prices. As Bitcoin and cryptocurrencies become a part of our daily lives and financial activities, a terminology consensus will inevitably be set among the community.