What is a Satoshi? Bitcoin and its 8 decimal places.
(Para versión en español haz click aquí)
One Bitcoin has 8 decimal places, the smallest fraction is called a Satoshi. The name derives from the mystical entity to whom the creation of Bitcoin is attributed: Satoshi Nakamoto
Therefore, 1 Bitcoin is equivalent to 100.000.000 (100 million) Satoshi. The image below illustrates this relationship:
These 8 decimal places enable access to Bitcoin without having to buy a whole unit.
Let’s take the Brazil as an example: currently the price of 1 Bitcoin is about R$ 14.000, but it is possible to acquire R$ 100 in Bitcoin. For your R$ 100 would would get 0,00714286 Bitcoin, or 714.286 Satoshi.
When Bitcoin first emerged in 2009, nobody imagined that one Satoshi would ever have any real value.
10,000 Bitcoin =2 Large Pizzas
One of the first, and surely the most famous, transactions involving Bitcoins was the exchange for 10.000 Bitcoins for 2 large pizzas which had a market value of USD 25. This put a price of 1 Bitcoin at USD 0,0025.
Since then the price of Bitcoin increased significantly and this year a single coin reached an all time high of almost USD 5.000. Currently it is trading at around USD 4.170.
Check this twitter account to see the value of that pizza in real time.
Venezuela and the Bolivar
Venezuela has been going through severe economic difficulties in the last few years, hyperinflation reached astounding 800% in December 2016. As a consequence the Venezuelan Bolivar (local currency) has been losing value on a daily basis.
To buy everyday goods you need, literally, bags of money:
Currently, in Venezuela, the price of 1 Bitcoin is over 100 million Bolivares, as can be seen on LocalBitcoins:
Given the increase in the value of Bitcoin and the severe devaluation of the Bolivar, and taking into account that there are 100 million Satoshi in a Bitcoin. 1 Bolivar is now worth less than 1 Satoshi!!!
Venezuela is an extreme case, but should Bitcoin continue to increase in value and local fiat currencies continue to lose value, other currencies may achieve parity to 1 Satoshi.
With the help of Winkdex (for historic bitcoin prices) and X-Rates (for historic Brazilian Real to US Dollar prices), I put together this table to show the Satoshi exchange rate in 3 different dates.
The question remains: will one day the Brazilian Real reach parity to a Satoshi? Unlikely, but not impossible, as a Bitcoin would need to be worth 1oo million Reais for that to happen.
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