The concept of a unit of account is a fundamental aspect of any economy, as it provides a standard measure for valuing goods and services. In order for a unit of account to be effective, it needs to be highly divisible, allowing for the facilitation of trades both large and small. This is where bitcoin stands out from traditional fiat currencies, as it can be divided into 100 million units, known as sats. In this article, we will explore the importance of divisibility in a unit of account and how bitcoin’s ability to divide into 100 million units sets it apart from other forms of currency.

What Is A Unit Of Account?

A unit of account is a standard unit of measurement that allows for the valuation of goods and services and the third primary function of money. It provides a common system of measure for buyers and sellers to communicate the value of their trades. In order for a unit of account to be effective, it needs to be able to account for trades of all sizes, from small transactions like buying a cup of coffee to large transactions like purchasing a house. This requires the unit of account to be highly divisible, allowing it to be split into smaller units that can be used to facilitate smaller trades. The ability to divide into smaller units is a key feature of a unit of account, as it provides a high degree of precision and flexibility.

Bitcoin’s ability to divide into 100 million units makes it an ideal global unit of account, as it can be used to facilitate borderless trades of all sizes.

Fiat Money Can Be Divided Into 100 Units

Fiat currencies, such as the dollar, pound, euro, peso, and yen, are not divisible in the same way that bitcoin is. While it is possible to exchange fiat currency for smaller units of money, such as coins or smaller bills, fiat currency itself cannot be divided.

For example, you cannot cut a hundred dollar bill in half and expect each side to be worth $50. Instead, you would need to spend the entire hundred dollar bill and hope that the person you are trading with has change that you need.

This lack of divisibility makes fiat currency less flexible for trades both large and small when compared to something that you can divide into 100 million units or even smaller. Since fiat currency can only be divided into 100 units, the smallest thing that you can measure with fiat is $0.01 and some trades may require something that costs less than that like streaming a song or watching a video. The inability of fiat currency to divide into 100 million units or limits its usefulness as a unit of account in the digital era. As online commerce continues to expand, the need for something that is both digital, divisible, and under your control is more important than ever.

Bitcoin Can Be Divided Into 100 Million Units

Bitcoin’s ability to divide into 100 million units is one of its key features, making it a highly flexible and convenient unit of account. A single UTXO (unspent transaction output) can be divided into smaller pieces, each of which is valuable in relation to its size. This is not how fiat currency works, as it cannot be divided in the same way. Instead, fiat currency can only be exchanged for smaller units of money, rather than being divided itself. The ability of bitcoin to divide into 100 million units makes it ideal for facilitating microtransactions, which may be less than $0.01 such as a swarm of micro donations or a 10 sat tip instead of a “like” on social media. The ability to divide into 100 million units is a key feature of bitcoin, making it a more convenient and flexible unit of account than fiat currency.

Take Action. Use Bitcoin

So, how can you start using bitcoin as a native unit of account, rather than relying on fiat currency? One way to start is by pricing things in fiat, but only accepting bitcoin. This can be done on platforms like Geyser.Fund, which allows you to create a bitcoin-only economy. The final goal is to only use bitcoin as the unit of account, so you won’t even need to reference the price of fiat to conduct trade with bitcoin. By using bitcoin as a native unit of account, you can take advantage of its ability to divide into 100 million units, making it a more convenient and flexible unit of account than fiat currency. The ability to divide into 100 million units is a key feature of bitcoin, making it an ideal unit of account for facilitating trades of all sizes. By using bitcoin, you can experience the benefits of a highly divisible unit of account, and see for yourself why it is superior to fiat currency. The ability to divide into 100 million units is what sets bitcoin apart from other forms of currency, and it is what makes it an ideal unit of account for the digital age.