When Satoshi Nakamoto designed bitcoin, his smartest trick wasn’t to cap the total supply at 21 million coins – it was to make each coin divisible to eight decimal places. At the time, as now, the smallest unit of bitcoin was worth so little as to be inexpressible in fiat terms. But bitcoin’s creator had the foresight to recognize that if his fledgling cryptocurrency succeeded, there was a good chance that 1 BTC would eventually be worth quite a lot. And when that happened, one satoshi (a moniker which the smallest unit of bitcoin had yet to acquire) would also be worth something.
Bitcoin is Big But Small, Scarce Yet Plentiful
The beauty of bitcoin is that it can be simultaneously big yet small. You can buy a car for 2 BTC or an altcoin for 60 sats (satoshis). With the change left over from the former, you could load up on a bunch of the latter. Bitcoin’s divisibility, coupled with its ability to be expressed as both something expensive and something cheap, makes it the world’s most versatile cryptocurrency.
Today you can purchase 100 sats for a cent. If 1 BTC were ever to reach $1 million, a satoshi would achieve parity with a U.S. cent. But that doesn’t need to happen for satoshis to attain utility. They already have a number of uses, even if altcoin traders are one of the few groups who currently refer to things as being priced in sats. Once Lightning Network gets up and running – or as bitcoin cash adoption continues to grow – there’s no reason why sats can’t become the de facto unit for referencing small purchases. If bitcoin maximalists have their way, one day there will be no U.S. dollar and everything will be denominated in BTC or satoshis.
Should the global monetary system ever collapse and hyperbitcoinization occur at scale, there will be more than enough bitcoins to go around. Not whole ones, admittedly, but enough satoshis for everyone to transact. To put this into perspective, the global GDP stands at $78 trillion while the total supply of satoshis stands at 2,100 trillion. A future in which everyone is transacting in sats may be improbable, but it is not infeasible.
A Drop of Ripple or a Sat of Bitcoin?
Bitcoin isn’t the only cryptocurrency that’s divisible into thousands or millions of decimal places. Iota and Neo aside, most altcoins do the same. Ripple, for example, goes to six decimal places, with the smallest unit known as a drop. It’s a cool name, even if the world is unlikely to require XRP by the millionth any time soon given that you can purchase a whole one for under a dollar.
Should ripple ever “do a bitcoin” and become hugely valuable, there will be 1e+17, or 100,000,000,000,000,000.00 drops to go round, which is almost as many drops as there are in the world’s oceans. (Let’s overlook the fact that Ripple Labs is sitting on 55,000,000,000,000,000.00 of those drops.) The idea of $1 million bitcoin seems fanciful right now, though not as fanciful as the notion of $100 ripple.
Satoshis: The Best Cryptocurrency You’re Not Using
There’s nothing wrong with buying a cryptocurrency like ripple or iota because you like the name, or the pretty logo, or have a soft spot for its CEO. Be it for emotional, ideological, or profitable reasons, by all means load up on XRP, DOGE, and XVG. But don’t mistake the dollar price attached to these coins for a fair valuation of their worth. Anything you can buy with a ripple you can buy with 10,000 sats and anything you can buy with a dogecoin can be bought for 60 sats. Big and small, Bitcoin’s base units do it all.
Do you think satoshis will eventually be widely used for pricing small purchases? Let us know in the comments section below.
Images courtesy of Shutterstock, and Fox Broadscasting.
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Author: Kai Sedgwick