Glossary

Bit

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A bit is short for “binary digit”, and is either a one or a zero. Bits are the atomic unit of digital data. All computer data is stored as bits. Bits are grouped into sets called bytes, which have 8 bits each.

You may be familiar with megabytes (MB) and gigabytes (GB). A megabyte is a million bytes or eight million bits. Likewise, a gigabyte is a billion bytes or eight billion bits. This means that when a file is 1MB large, it consists of 8 million ones and zeros.

The term 'bits' is occasionally used to refer to 1,000 satoshis or sats.
Occasionally, the term bits is used to reference an amount of bitcoin. In this context, a bit is 100 sats, or 1 millionth of a bitcoin. This usage has faded over time.
Related Terms
Binary
Binary is a number system that only uses two numbers: ones and zeros. Computers operate in binary, meaning they store data and perform calculations using only ones and zeros.
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Byte
A byte is a string of eight zeros and ones, or bits. Bytes are usually represented in hexadecimal notation, not as binary. One thousands bytes form a kilobyte (kB), and one million bytes forms a megabyte (MB).
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Encoding
The Bitcoin Protocol uses several different encoding schemes to represent data to users. The encoding schemes are chosen based on the data type, in order to optimise for human readability and conserve disk space.
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Satoshi
A satoshi, or sat, is the atomic unit of Bitcoin. One bitcoin is divisible into 100,000,000 sats. The existence of satoshis make Bitcoin divisible, a necessary trait for deflationary money.
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