One of the biggest misconceptions in the cryptocurrency world is the understanding of the units of digital currencies. It is often believed that bitcoin is too expensive to buy and many think that you have to buy one but can you buy part of a bitcoin? Many people face not only a misunderstanding and lack of knowledge but also a psychological barrier stepping into the scene for their first time.
Since so much emphasis is placed on how much one bitcoin is worth across the industry, new users often come in thinking that if they want to participate, they’ll have to spend tens of thousands of dollars to buy a whole bitcoin or altcoin.
So let’s back to the matter can you buy part of a bitcoin or you need to spend thousands on whole. The truth is, that it’s possible to buy a half of a bitcoin, a quarter of a bitcoin or even a fraction of a percent of a bitcoin. Each bitcoin is divisible to the 8th decimal place, meaning each bitcoin can be split into 100,000,000 pieces. Each unit of bitcoin, or 0.00000001 bitcoin, is called a satoshi. Any exchange will let you specify the amount of fiat currency you want to spend and in exchange sell you the equivalent amount of crypto coin. For example, if one bitcoin is worth $250, and you want to buy $125 worth of bitcoin, you’ll receive 0.50 bitcoin–assuming there are no fees.
Apart from the Satoshi, which is the smallest BTC denomination, many in the community suggested calling the second smallest denomination the Finney. This is to honor Hal Finney, the computer scientist who received the first BTC transaction from Satoshi Nakamoto, the creator of BTC. One Finney would be equal to 10 Satoshis. This means that one ‘Finney’ would be 0.0000001 BTC. The table below serves to put these values in context so that anyone can understand how the ‘Finney’ and all other BTC denominations work relative to each other:
Same goes for Ethereum, just like BTC has Satoshi and Millibits and the USD has dollars and cents, Ethereum has its own denominations and naming terminology.
Ethereum, has a metric system of denominations used as units of ether. Each denomination has its own unique name, some bear the family name of seminal figures playing a role in evolution of computer science and cryptoeconomics. The smallest denomination aka base unit of Ethereum is called Wei. Following a common pattern, ether also designates a unit (of 1e18 or one quintillion Wei) of the currency.
Ether is the internal network currency for Ethereum. Ether is used to pay for various transaction and computational tasks performed on the Ethereum network – it is called GAS. There is a GAS limit on each block. It limits how many computational transactions can be performed per block, that means that it limits the block size and determines the cost of executing a contract immediately. The table below explain how does Ethereum metric determination work:
|Kwei (babbage)||1e3 wei||1,000|
|Mwei (lovelace)||1e6 wei||1,000,000|
|Gwei (shannon)||1e9 wei||1,000,000,000|
|microether (szabo)||1e12 wei||1,000,000,000,000|
|milliether (finney)||1e15 wei||1,000,000,000,000,000|