« Go back to the cryptocurrency FAQ
Can you buy less than 1 Bitcoin? How does that work?~ The Beginner Investor
The answer to that is a big fat yes!
Bitcoin is a fungible currency. It can split into 100,000,000 parts (called Satoshi, named after its creator) and it can be put back together again. There are as many [chunks of] Bitcoin as there are wallets in existence. This is a very difficult concept to understand if you’re new to cryptocurrency, so I’ll try to make it very simple for you.
You can own less than 1 whole Bitcoin. You can own down to 0.00000001. It won’t go any lower than that, but it won’t need to go any lower than that for a very long time. These small units are called Satoshi. As of writing, they’re worth less than 1-penny. Even if they were worth 1 penny, they’d still be small enough to suit pretty much all transactions.
You can own multiple Bitcoin wallets. You can have 0.0001 Bitcoin in one wallet, 2.5 in another, 0.000004 in another, and so on. Bitcoin only exists in terms of what wallet it belongs to! There is no such thing as a Bitcoin that exists “outside” of a wallet; there are no equivalents of Bitcoin being like a dollar bill sitting on the ground for anyone to pick up. (This doesn’t including Block Rewards from mining, but that’s a different concept altogether.)
You can merge two chunks of Bitcoin. Using those 3 wallets above, you could send all wallets into one address. In that example, if you consolidated (which I call “coinsolidating”) then you’d be the owner of a wallet with 2.500104 Bitcoin. You don’t own “Two Bitcoin and One Half of a Bitcoin” – You own 2.5. It exists as one unit until you break them apart.
People split up Bitcoin into hundreds of separate smaller portions for anonymity. There are services that will ‘wash’ your Bitcoin by transferring it dozens of times in order to obscure the sending and destination address. Given our current technology, this is fairly effective, but it’s not entirely foolproof. Smart people with enough processing power can pinpoint who sent how much and where they went to. Also, this is not so effective ever since the transfer fees have been increasing.
Learn about the ‘millibit’. a Millibit (mBit) is the up and coming term for measuring Bitcoin wealth. Because the price of each coin is getting so intimidatingly high, there needs to be a smaller unit of measurement. It’s a bit impractical to say, “I own 5 million Satoshi’s” so the term mBit came to imply 0.001 Bitcoins. That’s one-thousandth of one coin.
Rather than thinking, “I can only afford to invest in 4-thousandths of a Bitcoin” instead tell yourself, “I can afford 4 millibits!” This takes the psychological edge off of thinking about owning a small fraction of something.
5