What Is a Bit?

A bit is a sub-unit of a bitcoin, created to make transacting with smaller amounts of BTC more user-friendly. Just as a dollar can be broken down into cents, a bitcoin can be divided into smaller units. A bit is one of these convenient units.

The relationship is straightforward:

1 Bitcoin (BTC) = 1,000,000 bits

Why Use Bits?

As the value of a single bitcoin has risen, quoting prices for everyday goods and services in full BTC (e.g., "0.0005 BTC for a coffee") can be cumbersome. Using 'bits' makes these small amounts easier to read and comprehend.

Bits vs. Satoshis

The smallest possible unit of Bitcoin is a "satoshi" or "sat." One bitcoin is made up of 100 million satoshis. A bit is simply a more "human-readable" layer on top of sats, where 1 bit = 100 satoshis.

In Practice

While the underlying Bitcoin protocol always operates in satoshis, many wallets and services provide the option to display balances in bits or BTC for user convenience. Understanding these units is key to navigating the Bitcoin ecosystem effectively.