There is a common misconception among the possible bitcoins buyers that only those with a lot of money can afford to enter the market. Still, this is simply not the case.
Using exchanges like krakenpeople can buy bitcoins (BTC) worth as little as $10. This is possible because there are smaller units of bitcoin, similar to how a US dollar is made up of one hundred cents.
Investors who don’t have thousands of dollars of disposable income to buy a whole bitcoin can buy fractions of one.
The smallest unit of a bitcoin is known as a satoshi or SAT.
One hundred million satoshis (SATS) make up a single bitcoin, which means that it is possible to buy 0.00000001 BTC or one hundred millionth of a bitcoin.
The unit was officially named after the creators of Bitcoin, Satoshi Nakamoto, in 2011 after a discussion about the divisibility of the asset in the bitcointalk forum.
Advances in secondary scaling technologies: external solutions that help block chain Networks like Bitcoin reduce congestion and achieve higher transaction throughput – they have paved the way for users to transact in units even smaller than satoshi.
the lightning network (LN) is one such technology that allows users to transact significantly smaller amounts than would be possible on the Bitcoin blockchain.
The LN allows users to transact up to one thousandth of a satoshi. This smaller unit, known as a millisatoshi, only exists on the LN and is rounded up to the nearest satoshi once final balances are recorded on the Bitcoin blockchain.
Why are satoshis important?
One of the main motivations for dividing bitcoin into smaller units was to facilitate micropayments.
In the bitcoin white paper, Nakamoto envisioned that people would use bitcoin as a worldwide electronic cash system. To achieve this, smaller units were needed to ensure holders could purchase everyday items like a cup of coffee in the event the fiat currency-denominated price of bitcoin increased over time.
Fast forward to today, and major technology companies like PayPal have helped make this vision a reality with integrated payment solutions that allow millions of customers to use their bitcoin balances to purchase goods or services through the platform.
That being said, high bitcoin fees and price volatility during periods of high congestion affect the viability of micropayments. Because of this, many people choose to hold bitcoin as a store of value instead of using it as a medium of exchange.
In addition to micropayments, bitcoin’s divisibility means that anyone can invest in the asset regardless of their level of wealth.
For example, if the price of a bitcoin is $50,000 and Bob wants to invest $100, he would end up with 0.002 BTC in his crypto wallet.
Regardless of how the market price of bitcoin fluctuates, the amount of bitcoin Bob bought will remain the same in his wallet. Bitcoin’s divisibility into smaller units allows accessibility to millions of people around the world. While the price of fiat to bitcoin might change, Bob’s fraction of bitcoin will always stay the same.
Start with Kraken
With Kraken, you don’t need to buy an entire bitcoin to participate in the cryptocurrency ecosystem. Sign up today and start investing in bitcoin with just $10.
This post Busting Crypto Myths: I Can’t Buy Bitcoin Because I Can’t Afford One
was published first on https://blog.kraken.com/post/16608/busting-crypto-myths-i-cant-buy-bitcoin-because-i-cant-afford-one/