Can You Buy a Fraction of a Bitcoin?
It can be easy to believe one must purchase an entire Bitcoin to actually invest in the cryptocurrency. Given the cost of BTC is typically greater than $20,000, this is a larger sum than many on-the-fence investors would be willing to stomach. Thankfully, Bitcoin is a cryptocurrency that can be fractionalized, distributed, and spent in tiny pieces known as “Satoshis”. This guide will navigate the smallest denominations of BTC to help newcomers understand more about the Bitcoin currency and its associated blockchain.
- Bitcoin can be fractionalized all the way to eight decimal places – equivalent to about US$0.0023. This is known as a satoshi.
- Most cryptocurrency exchanges will allow investors to buy as much (or as little) BTC as they want, although the exact figure will depend on that platform’s buying limits.
- The BTC blockchain can recognize transactions as little as 1 satoshi and investors can sell as little as $0.0023 worth of BTC – if the exchange has no limitations.
What Is A Satoshi?
A satoshi (denominated as SAT) is the smallest possible fraction of Bitcoin. It is equivalent to 100 millionth of one whole Bitcoin, or, 0.00000001 BTC. The denomination was named after the Bitcoin blockchain’s inventor, Satoshi Nakomoto, and can help owners quickly picture the value of a certain item. Essentially, the satoshi denomination helps BTC holders buy/sell products without needing to worry about the coin’s specific market value.
For example, a transaction worth 0.0317560 BTC might be a bit confusing to some at a glance. On the other hand, the same transaction being worth 317,560 satoshis can be much quicker and easier for investors to grasp – even though the values are exactly the same.
How Many Satoshis Are In One Bitcoin?
One satoshi is equivalent to one hundredth million of a Bitcoin. Therefore, there must be 100 million satoshis in one BTC. Investors can purchase as many satoshis as they please – whether they buy all 100 million, or just a few hundred thousand. There are other common denominations used by the community to improve the ease of BTC transactions. These include:
- One millibitcoin (mBTC) – 100,000 SAT, or 0.001 BTC
- Microbitcoin (uBTC) – 100 SAT, or0.00000100 BTC
Bitcoin tends to use satoshis as its sole denominator. This is different from other common, expensive cryptocurrencies like Ethereum, which uses wei, Gwei, and more.
Can You Buy a Fraction of 1 Bitcoin?
Yes, it is possible to buy a small fraction of a Bitcoin as an investment. The smallest unit of a Bitcoin that can be bought or sold is known as a "Satoshi", which is equal to 0.00000001 Bitcoin, or USD 0.000223 at the time of writing. There are several ways to obtain the smallest unit of Bitcoin, the most common being using a crypto exchange.
How To Buy A Fraction Of Bitcoin?
Buying a fraction of a Bitcoin works exactly the same as buying any other cryptocurrency via an exchange. Because BTC can be split up into such tiny fractions, investors can purchase any amount of the digital currency so long as it fits within their exchange’s buy/sell limits. To buy Bitcoin in small amounts, follow these steps:
- Select and sign up for a reputable crypto exchange. Nearly every single cryptocurrency exchange on the market sells BTC. There are several metrics that new investors should consider when picking an exchange. For buying small fractions of Bitcoin, investors may want to prioritize low fees and low buying limits. Binance is a good option with relatively low minimums and transaction fees.
- Navigate to the spot trading hub. Most platforms will make it easy for new customers to find their buy/sell page. On Binance, for example, simply head to the “Buy Crypto” page and select “Bitcoin” as the desired asset from the dropdown menu.
- Buy a fraction of a BTC. Finally, enter the amount of BTC to be purchased. As we are buying a fraction, simply purchase less than the coin’s current trading price and confirm the transaction.
Where To Buy Fractions of Bitcoin?
When choosing an exchange to buy fractions of Bitcoin, it’s important to consider fees and buying limits. Other considerations should include security history, supported assets and earning features.
- Binance. By far the world’s most popular exchange for buying and selling fractions of Bitcoin. Investors can make transactions with a base fee rate of 0.1% – which is very competitive. Additionally, Binance has a relatively low minimum order of US$10, equivalent to about 43,000 satoshis. The platform has excellent liquidity too, making it cost-effective for higher-volume investors wanting to purchase 0.5 BTC or more.
- ByBit. A global Bitcoin exchange commonly utilized by serious traders. The platform has an excellent fee structure, with the rate starting at 0.1% and falling to as little as 0.02%. The minimum BTC purchase (in a BTC/USDT trading pair) is 0.000048 BTC. This is currently equivalent to about US $1.15, or 4,800 satoshis – one of the lowest Bitcoin buying limits of any platform. However, the spot trading minimum is US $10, right around the average for most exchanges.
- eToro. A well-known Israeli exchange is renowned for being a prime innovator of “copy trading”. eToro charges a 1% fee for buying BTC and other digital currencies, which is on the higher end of the spectrum. Additionally, the minimum amount of Bitcoin that can be purchased is a standard US$10.
- Kraken. A popular US-based cryptocurrency exchange that sells a variety of digital assets. The easiest way to buy assets on Kraken, “Instant Buy”, uses a variable fee structure that will change depending on network congestion, payment method, and other factors. More experienced traders using the Kraken spot trading hub can buy BTC for anywhere from 0.26%-0.00%. The minimum deposit and order for buying Bitcoin on Kraken are 0.0001 BTC – currently equivalent to about US $2.35 or 10,000 satoshis.
|Exchange||Fees||Minimum BTC order (BTC)||Minimum BTC order (USD)|
|ByBit||From 0.1%||0.000048 BTC||N/A|
|Kraken||Variable, spot trading from 0.26%||0.0001 BTC||N/A|
*Note that BTC/USD in this table reflect the individual exchange’s minimums and are not influenced by the market price.
What Is The Minimum Amount Of Bitcoin You Can Buy?
Theoretically, one SAT is the lowest amount of Bitcoin that the network can process. Microtransactions on the blockchain must be worth at least one satoshi to be verified. However, most wallets, exchanges, and other decentralized applications will require more satoshis to accept transactions.
As one satoshi is worth such a low amount of money (less than a cent), the minimum purchasable amount of BTC will be arbitrarily determined by the exchange selling it. For example, one platform may require each transaction to be worth >$10, while others might let investors buy one dollar’s worth of Bitcoin (about 4,000 SAT).
Payment Methods For Buying Small Amounts Of Bitcoin
Most exchanges now accept fast and free bank transfers, which will likely be the best deposit method for the majority of investors. However, when buying smaller denominations of BTC, it’s always a good idea to choose a deposit and payment method that has minimal fees. In particular, avoid flat rate deposits or payment fees, as these will eat into profit margins.
What Are The Fees For Buying Fractional Amounts?
The fees for buying fractional amounts of Bitcoin will vary from exchange to exchange. Most platforms will charge a percentage-based transaction fee – typically lower than 1%. For example, if someone purchased 0.001 BTC, they might be charged 0.00001 BTC in fees.
It is worth noting that exchanges tend to reward investors with high trading volumes. Those that regularly purchase large amounts of fractional Bitcoin (eg., 0.5 BTC twice a week) may have their trading fees slashed.
Is It Good To Buy Fractional Shares Of Bitcoin?
Buying fractional amounts of Bitcoin isn’t something that’s “good” or “bad”. Rather, for many that cannot afford to invest $20K+ into a volatile asset, buying satoshis is a necessity. Fractional Bitcoin allows investors to diversify their portfolios into a sector that, if satoshis didn’t exist, may be inaccessible to most.
Is There A Downside To Buying Fractional Shares Of Bitcoin?
Buying fractional shares of Bitcoin comes with the same risks as buying BTC, or any other digital currency. Crypto is a volatile asset class, known for wild overnight fluctuations in price and can randomly drop (or rise) in value for little obvious reason. Moreover, the prices can also be different across exchanges making it difficult to find value. Additionally, buying fractional shares with a flat rate fee structure can become more expensive compared to buying a full BTC.
Buying Fractions (Satoshis) vs. Whole Bitcoin
There’s no one “best” way to buy Bitcoin. Whether an investor purchases a fraction of a BTC (satoshis) or one whole token will entirely depend on their investment goals and unique financial situation. For someone to purchase a whole BTC, they will likely need $20K+ in disposable income to invest, which may be more than what most people are willing to put toward a volatile investment.
Additionally, accumulating satoshis over time can help investors utilize a long-term dollar-cost averaging strategy. This allows the investor to slowly build up their BTC portfolio without needing to worry as much about timing the market. On the other hand, buying one whole BTC in a lump sum can save investors money compared to purchasing satoshis over multiple transactions (if trading against a flat fee).
Frequently Asked Questions
Most cryptocurrency exchanges will automatically track the value of customer transactions and portfolios. If not, investors can set up a portfolio tracker on platforms such as Coinmarketcap, or simply convert their BTC balances into satoshis for an easier-to-read denomination.
Yes, it is legal to buy a fractional amount of Bitcoin. The only exceptions are in locations where buying BTC (and other cryptos) is outright illegal, such as China.
Buying and holding a fraction of BTC is unlikely to incur any taxable event – although each country will have its own tax rules. However, if the BTC fractions are sold, put into a savings account, or gifted, investors may have to pay tax on the assets. Always refer to local tax guidelines.