0172 - Draft - Informational - May 1, 2025 (1 year, 2 months ago)
1
2025
BIP: 172
Layer: Applications
Title: Define Bitcoin Subunits as Satoshis
Author: OceanSlim <[email protected]>
Comments-Summary: No comments yet.
Comments-URI: https://github.com/bitcoin/bips/wiki/Comments:BIP 172
Status: Draft
Type: Informational
Created: 2025-05-01
License: BSD-2-ClauseThis BIP proposes to formally define and standardize Bitcoin's smallest indivisible unit (1/100,000,000 of a bitcoin) as "satoshi" (singular) or "satoshis" (plural), with "sats" as the standard abbreviated form. This standardization aims to improve clarity in communication, user interfaces, documentation, and development across the Bitcoin ecosystem.
As Bitcoin adoption grows, the need for a clear, standardized terminology for its subunits becomes increasingly important. Currently, there are various terms used to refer to Bitcoin's smallest unit (1/100,000,000 BTC), including "satoshi", "satoshis", "sat", "sats" and sometimes simply expressed as decimal values of bitcoin (0.00000001 BTC).
This lack of standardization can lead to:
By formally establishing "satoshi"/"satoshis" as the standard term with "sats" as the recognized abbreviation, we can improve clarity and consistency throughout the ecosystem.
This BIP formally defines:
To ensure clarity and inclusiveness in user interfaces and assistive technologies, the following recommendations apply:
Satoshi Nakamoto, the creator of Bitcoin, established that one bitcoin would be divisible to eight decimal places, creating 100,000,000 units per bitcoin. The community has organically adopted the term "satoshi" to refer to this smallest unit.
As Bitcoin's value has increased, expressing smaller values in fractional bitcoins has become increasingly unwieldy (e.g., 0.00000546 BTC). Using satoshis as the unit of account for smaller values (e.g., 546 sats) is more intuitive and less error-prone for humans.
The term "satoshi" and its abbreviation "sats" have already gained widespread adoption within the Bitcoin community. This BIP seeks to formalize this existing convention rather than introduce new terminology.
The proposed bitcoin/satoshi (or BTC/sat) standard follows the established pattern of major world currencies, which typically have a primary unit and a smaller subunit. Most notably, the United States dollar—the world's primary reserve currency—uses dollars and cents in a two-tier denomination system. This familiar dollars/cents model has proven effective and intuitive for everyday transactions across different scales. The bitcoin/satoshi system mirrors this approach while accounting for Bitcoin's higher divisibility requirements. Furthermore, the phonetic similarity between "sat" and "cent" creates an intuitive bridge for newcomers to understand Bitcoin's smallest unit, making the learning curve less steep for those familiar with traditional currency systems. This natural familiarity leverages existing mental models of how currency denominations work.
Two notable proposals related to Bitcoin denomination have been put forward:
Our proposal represents a minimally disruptive approach to standardization, formalizing existing common practice rather than introducing new terms (BIP 176) or redefining existing ones (BIP 177).
BIP 176 proposes using "bits" as a standard term for 100 satoshis (or 0.000001 BTC). While this proposal has merit for creating a middle-ground denomination that avoids small decimal places when bitcoin's value is high, our approach differs in that it:
BIP 177 takes a more radical approach by proposing to redefine the term "bitcoin" to refer to what is currently called a "satoshi" (1/100,000,000 of the current bitcoin). While this proposal aims to eliminate decimal points and simplify mental calculations, our approach differs in that it:
This proposal does not affect the technical operation of Bitcoin or its protocol. It is purely a standardization of terminology for human communication and user interfaces.
Existing applications that use other terms or conventions can continue to operate but are encouraged to adopt the standardized terms to improve overall ecosystem clarity.
This BIP is licensed under the BSD 2-clause license.
Not applicable as this is an Informational BIP that standardizes terminology rather than implementing technical changes.
Before standardization, various formats might be used:
After standardization, the preferred formats would be:
Thanks to the entire Bitcoin community who has organically adopted the terms "satoshi" and "sats" over the years. If anyone can point to early references of the term being used in this way please leave a comment so we can amend this BIP to acknowledge it.