Bits are a unit used to represent small fractions of Bitcoin, making it easier to handle and express smaller amounts without using many decimal places. Here's how they work:
1. Conversion to Satoshis:
Bitcoin is divisible up to 8 decimal places. The smallest unit is called a "satoshi." One Bitcoin (BTC) is equal to 100,000,000 satoshis.
2. Bits as a Unit:
A bit is equivalent to 100 satoshis. Therefore, 1 Bitcoin equals 1,000,000 bits.
3. Simplifying Small Transactions:
Instead of writing 0.0001 BTC, you could say 100 bits. This simplification makes it easier for users to handle microtransactions, tipping, or small purchases using Bitcoin.
4. Real-Life Example:
If 1 Bitcoin is worth $40,000, then 1 bit would be worth $0.04 (4 cents), and 100 bits would equal $4.
In practice, using bits helps avoid confusion with many decimal places, making it easier for users to read, interpret, and transact with smaller Bitcoin values.
This is all guess. Don't be sure.
Stay tune & wait for final result
Happy mining 🤑
