Satoshi as the base unit
We’ve seen them all Bitcoin, Bitcent, mBTC, Millibit, Milli, µBTC, Microbitcoin, Mike, Bit, Finney, Satoshi, etc. But I fear that these have achieved nothing other than result in increased confusion and inconsistency. After seeing just about every iteration over the years, it is becoming more and more clear that the path forward is to adopt the Satoshi as the base unit and use SI (metric) prefix denominations. Before I proceed any further, I am not advocating for this to be the ‘official’ base unit, but rather to make the case for us to begin internally ‘thinking’ in terms of Satoshis.
Humans are not well adapted to think nor work in terms of decimals, and neither are computers (precision or rounding errors) for that matter. Therefore, it is wise to adopt an integer as the base unit and stop pandering to the former paradigm of bills and coins as suggested in the BIP176 (‘bits’) proposal. Decimals are simply nonsensical in the digital age and just work towards creating needless complexity. For example, 100 sats == 100 sats is more clear than 1 bit == 100 sats. The bit in this scenario is just us pandering to the past dollar system. I am also not even going to bother touching the craziness associated in trying to conceptualize mBTC and µBTC and sats.
The Satoshi as a base unit allows us to effectively incorporate and integrate the SI system which is already engrained in all human measurement systems, especially digital ones. In all measurement systems, we always find the most appropriate smallest unit or denomination for each respective object and work upwards.
For example, digital storage is measured in bytes, network traffic is measured in bits, wine and spirits are measured in milliliters, certain types of medicine in milligrams while others in micrograms, weight in grams or kilograms when it makes sense to do so, distance in kilometers, and length in meters. It doesn’t make sense to measure a vodka shot in liters, but rather 50 mL. It doesn’t make sense to measure a modern hard drive as 4,000,000 MB, but rather 4TB while a text document can be better conceptualized as 100 kB. It is better to measure the weight of an adult human male in kg, while in baking it is better to use grams. The electricity consumption of a home is measured in kW, a small appliance in watts, and a city electrical substation in MW. Real estate in America is best represented in thousands (k), while it is easier to use the base unit of dollars when buying lunch at work — We do not say, “I spent 0.01k USD at lunch today,” just as we do not say “the offer on our house was 558,938.39 USD.” And bank money laundering fines are measured in millions (M) or billions (B).
In all of these examples, we aim towards the most suitable and appropriate denomination, but the base unit does not change. The base unit provides us with a common reference point. The SI system helps us scale up or down. The SI system is all around us and is completely engrained in how we measure and conceptualize things.
In digital information and computer systems, the base units are always the smallest unit — bits for network traffic, bytes for digital storage, hertz for CPU clock speed, hash for Bitcoin’s PoW. Denominations can change when it is appropriate to do so as shown earlier. Music files are in MB, full length movies are in GB, hard drive in TB. Home internet speeds are in Mbps while ISPs may think in Gbps. Computers and smartphone CPUs are measured in Ghz, while IoT or small appliance CPU clock speeds are in Mh. Modern Bitcoin mining equipment in 2018 are measured in TH/s while the entire Bitcoin network is currently operating at 50+ EH/s.
The Satoshi (0.00000001) is the smallest unit per the Bitcoin base-layer protocol consensus rules and it makes sense to adopt it as our base unit and begin ‘thinking’ in terms of Satoshis and nothing else. Please see the chart below:
The Satoshi as the base unit allows us to scale it up and denominate everything in Satoshis. More importantly, it provides us with a good reference point as humans are able to better comprehend larger integers than tiny decimals. It is simply easier to understand 500k sats than 0.005 BTC or 1.5M sats than 0.015 BTC (or 15 mBTC). As Bitcoin’s price increases, it makes even more sense to adopt the Satoshi base unit. Today 1 USD is equivalent to 15,000 sats or 15k sats meaning a cup of coffee is 30k to 45k sats. Tomorrow these numbers may reach the 100s.
On a side note, I envision future lightning network financial engineers to use kilo/mega denominations when talking about lightning channel balances just as network engineers use kilo/mega/giga denominations when talking about network capacity speeds — “I just opened a 500 kilosat channel,” or “I just closed a 1.5 megasat channel.”
We should work towards a single base unit and colloquially denominate in SI prefixes (10³) upwards when appropriate. We already do this everywhere! Start thinking in Satoshis today, tomorrow you will.
