Ready to take your first step into the exciting world of Bitcoin investing but don’t have a cool $100,000 USD to jump straight to being a whole coiner? Relax, you can absolutely buy a fraction of a bitcoin and we’re going to go through all the best ways to do so today because let’s face it, who needs a whole one when you can have a slice?
Contents
Can You Buy A Fraction Of A Bitcoin?
Yes! We’ll get into more details below, but you don’t need to buy anything even close to an entire bitcoin just to start investing. Purchasing bitcoin can be done in a slew of different ways and you can buy a whole bitcoin or as little as one hundred millionth of a bitcoin, also referred to as a Satoshi or “sat”.
What Are The Units Of Bitcoin?
To get the best handle on fractional Bitcoin purchases let’s first go through how a whole bitcoin is divided up. Bitcoins have the currency symbol ₿ in front of them and are highly divisible, especially since transactions involving whole Bitcoins are no longer quite so common given 1 Bitcoin is now worth so much.
Bitcoin is decentralized, so there is no official organization or central authority to set official names for units. However since 2014, the most common units for Bitcoin (abbreviated BTC or XBT) are:
- 1,000,000 BTC = megaBitcoin
- 1,000 BTC = kiloBitcoin
- 10 BTC = decaBitcoin
- 1 BTC = 1 Bitcoin
- 0.01 BTC = 1 cBTC = 1 centiBitcoin (also referred to as bitcent)
- 0.001 BTC = 1 mBTC = 1 milliBitcoin / mbit / millibit / bitmill
- 0.000 001 BTC = 1 μBTC = 1 microBitcoin / ubit / microbit / bits
- 0.000 000 01 = 1 satoshi / sat
The smallest value that the Bitcoin network supports sending is the Satoshi, one hundred-millionth (0.000 000 01) of a Bitcoin. In other words, the network does not support sending fractions of a Satoshi.
Since it is a hard limit, it seems natural to use it as a unit, though it currently has very little value. The plural of Satoshi is Satoshi: “Send me 100 Satoshi”. This base unit is named after Bitcoin’s creator, the pseudonymous Satoshi Nakamoto.
Special Note! Be aware that 1 BTC = 100 Million Sats, NOT 1,000 Million Sats! We’re used to things growing in groups of 3 (eg 1 -> 1,000 -> 1,000,000) but Bitcoin only splits into 8 decimal places not 9. So rather than there being 1,000 million there are only 100 million.
This is why some suggest we should move towards the Satcomma Standard where denominations would be written as ₿1.23,456,789. This allows the user to clearly see that there are 123 million Satoshi while at the same time also seeing that that is equal to 1.23 Bitcoins.
How Do You Buy Bitcoin?
Buying bitcoin is no different to trading other currencies such as the USD for EURO. You can buy a whole bitcoin (1 BTC) or fractions of a bitcoin (0.005 BTC) and doing so usually incurs a trading fee which is a percentage of the trade amount. Buying bitcoins can be done on many online cryptocurrency exchanges, through Bitcoin Exchange Traded Funds (ETFs) or IRL places such as at Bitcoin ATMs and comes in two types:
- Non-KYC/AML Decentralized Exchanges (DEX)
- KYC/AML Centralized Exchanges (CEX)
KYC (Know Your Customer) or AML (Anti Money Laundering) rules are now near universal across all centralized exchanges. These rules require you to surrender all your personal information (name, address, DOB, drivers license, photo etc) to a private company for permanent record keeping and sharing with many third parties and governments before they allow you to transact.
Companies like Binance, Coinbase, eToro, PayPal, RobinHood or any other program / company that asks for your identity are KYC/AML Centralized Exchanges. To buy bitcoins through them you will need to create an account with them, prove your identity by giving up all your private information and then fund that new account with fiat money like USD or EUR or other cryptocurrencies.
>> Deep Dive: Crypto Exchange Bankruptcies
Keep in mind that you’re sending funds to a completely independent company that likely isn’t as regulated, secure or backed by your government as legacy financial institutions. There is no “Federal Guarantee” if the company goes bankrupt or simply steals your money. As such, ensure you properly investigate and trust any third party exchange you interact with and give your money / bitcoins to.
Non-KYC decentralized exchanges can make your Bitcoin investment journey a little slower than using traditional financial markets like investing through a Bitcoin ETF, but they completely side step all the very serious issues that Centralized Exchanges and KYC have. This is because you don’t have to reveal your real world identity to use them and can instead just purchase bitcoin directly from other regular people around the world.
While some might think this sounds like risky investment advice, it actually results in your security, privacy and bitcoin increasing. While there will always be scammers out there, traditional cryptocurrency exchanges are by no means risk free. From companies going bankrupt, to out right stealing your entire investment portfolio to the plethora of issues that come from KYC they’re not as safe as most people think. Below are some of our top Crypto Exchanges:
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