Bits: Fractional Bitcoin Units Explained

Bits is a common unit, or division of one Bitcoin.

What are Bits?

Like any currency, Bitcoin must have the ability to divide. This is especially true when using bitcoin and other cryptocurrencies as a unit of exchange rather than pure speculation. Fission has also become especially important when the price of bitcoin has skyrocketed. There is a long list of widely agreed upon classifications of bitcoin subunits. Bitcoin uses the metric system and is divided into eight decimal places. A deci bitcoin (written as dBTC) is equal to 0.1 coin. The centi-bitcoin (cBTC) is equal to 0.01, and the smallest unit of value, 0.00000001, is known as a satoshi. The use of the bit as a standard division grew out of a proposal originally published on the Bitcoin subreddit website, which suggested dividing each coin into a million units. Such units are called bits.

A bit as a unit of measure has several key advantages. In most standard financial software, it is only possible to parse two decimal places, which is key to Bitcoin compatibility. The number of bits can be expressed to two decimal places, such as 99.99 bits, making accounting and record-keeping with bits possible.

Similarly, the simplicity of bits is assumed to mean that they will remain an easily understood expression of value, also because they conform to the subdivision format of most world currencies. The agreement on units is seen as an important element of Bitcoin’s path to mass adoption. To become a widely used way to pay for goods and services in the real world, it must be easily understood by ordinary consumers.

Related terms