What Is Satoshi (sat)?

The Bitcoin protocol actually stores balances and transaction amounts as whole numbers in satoshis; the decimal BTC values seen in wallets are merely a display format. For example, a transfer of 0.005 BTC is a transaction of 500,000 satoshis at the protocol level. Transaction fees are also usually expressed in 'sat/vB' (satoshis per virtual byte).

As the unit price of Bitcoin has risen, the satoshi has become more practical in everyday use. Small payments, micropayments on the Lightning Network and the phrase 'stacking sats', which describes regularly accumulating small amounts of Bitcoin, are all discussed in terms of this unit. Because the total Bitcoin supply is capped at 21 million BTC, the maximum supply in satoshis is approximately 2.1 quadrillion units.

There is no unit smaller than the satoshi on-chain; however, Lightning Network channels can keep accounts internally in 'millisatoshis', one thousandth of a satoshi, and these amounts are rounded when written on-chain. On Ethereum, the similar smallest unit is wei, while gas fees are usually expressed in gwei.