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 bytes, which are sets of 8 bits.

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 takes up 8 million bits of storage.

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.