A sub-unit of Bitcoin, equivalent to 100 satoshis.
A bit is a subunit of Bitcoin, equivalent to 100 satoshis or 1/1,000,000 (one millionth) of a Bitcoin. The term was proposed to make Bitcoin amounts more accessible and user-friendly for everyday transactions and pricing.
Bits are often used in transactions because they represent a more manageable denomination for real-world pricing. As Bitcoin's value has increased over time, using smaller denominations has become increasingly practical for everyday transactions. To put this in perspective:
Amounts smaller than 1 bit are typically considered insignificant or "dust" in the context of Bitcoin transactions, as they may cost more in transaction fees than they are worth to transfer.
If a coffee costs 5,000 bits, it's easier to comprehend than saying it costs 0.005 BTC or 500,000 satoshis. This denomination bridges the gap between whole bitcoins (which are very valuable) and satoshis (which are numerous for everyday items).
The term "bit" for this Bitcoin denomination gained popularity around 2014 when Bitcoin's price had risen significantly, making microbitcoin (μBTC) a more practical unit for everyday reference. Some wallets and exchanges offer the option to display balances in bits instead of full bitcoins.
In Bitcoin's denomination hierarchy, bits fit between satoshis (the smallest unit) and millibitcoins:
As Bitcoin adoption grows and its value potentially increases, these smaller units may become increasingly important for everyday transactions and pricing.
All terms and definitions may update as the Cryptionary improves.