Satoshis, bits, mBTC, BTC?

The article below first appeared on bitcoin.nl on November 13, 2018.

Everyone agrees: we will have to change the unit we use for declaring amounts of bitcoins to one that is more manageable than calculating in decimals. But which unit will it be?

The candidates

Many different candidates have been floated over the years as alternative notation units, each with its own group of fervent advocates. Yet only one unit will eventually be widely used. Which this is, that remains to be seen and is entirely up to you: the user. We list the candidates.

Whole Bitcoins (BTC)

We have been recording amounts of bitcoins since the beginning in whole bitcoins, with eight decimal places. This note worked fine in the early years; bitcoins were not yet worth much and the group of users mainly consisted of technicians who were fine with calculating with many decimals. However, it was not convenient, and this is evident today with smaller amounts and new users. It is inconvenient to send amounts of 0.00007198 bitcoins; it does not run smoothly mentally and is prone to errors. With this, listing bitcoins as entire BTC will likely become less common, and ultimately be reserved for the wealthy who own entire bitcoins.

mBTC

The unit mBTC stands for millibitcoin and indicates one thousandth of a bitcoin: 0.001 BTC. This unit has many proponents from a group that likes to calculate with money in the same way they do with distances (meters) and quantities of liquid (litres), but immediately comes across as impractical for most. The unit is too large for displaying small prices, so another unit is needed for small prices or decimals have to be used again.

??BTC

This is where the unit ????BTC comes into play: microbitcoin; one millionth of a bitcoin (0.000001). This unit seems small enough for everyday use and allows you to write down prices as, for example: 1.50 ????BTC. Microbitcoin, however, does not conveniently calculate back to larger amounts of bitcoins and remains part of the somewhat clumsy system of thousandths for money.

 

bits

The unit ????BTC has been given the name bits, which makes it seem a bit more human and less mathematical than microbitcoin. Paying ten bits just sounds a lot nicer than ‘that’s eight microbitcoins please’. However, Bits suffers from the same disadvantages as ????BTC and therefore seems to want to ensure that we continue to calculate money in the same way as we do now: in whole euros with two decimal places. For example, 1.25 becomes 1.25 bits. But is it really necessary that we maintain this system of the past?

The Finney

The ‘Finney’ was conceived as a tribute to Hal Finney, computer scientist, one of the first participants in the bitcoin network and recipient of the first bitcoin transaction. A Finney stands for 0.0000001 bitcoin, or one-tenth of a bit or ??BTC. It is possible that the unit will come into use in combination with the unit of bits, as an indicator of what we now know as a dime.

The satoshi

For now, the biggest contender seems to be the satoshi. It is no surprise that the name of this unit comes from the creator of bitcoin: Satoshi Nakamoto. A satoshi represents the smallest bitcoin unit: 0.00000001 bitcoin. At first glance, the unit seems too small to be practical, but if you think about it for a moment and consider that the price of bitcoin may rise, the satoshi turns out to be a practical unit for daily use.

It offers a system that people can get along with: a unit that can be indicated as a multiple. It is easier for people to handle amounts like 500,000 satoshis than 0.005 BTC and 1.5 million satoshis instead of 15 mBTC. With this, it may well be that satoshi is the ultimate winner. Read here an extensive article about the use of satoshis as a unit.

The choice is yours

Which unit eventually sees wide adoption is entirely up to you. Eventually, most (lightning) wallets will implement multiple units, as shown in the image above, leaving the choice to the user. You can see a full list here.

 

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