A common misunderstanding when investing superannuation in Bitcoin is the thought that you need to buy a whole Bitcoin. However, this is not that case and you can in fact buy a fraction of a bitcoin. Bitcoin, like many cryptocurrencies, is divisible into very small units. The smallest unit of bitcoin is called a Satoshi, named after the pseudonymous creator of Bitcoin, Satoshi Nakamoto. One Satoshi is equal to 0.00000001 bitcoin, or one hundred millionth of a bitcoin.
So, if you want to invest in bitcoin but don’t have a large capital base, you can buy a fraction of a bitcoin. For example, you can buy 0.1 bitcoin, which is equivalent to 10 million Satoshis. Cryptocurrency exchanges allow you to buy and sell fractions of a bitcoin, so it’s easy to get started with a small investment.
The fact that you can breakdown a Bitcoin into smaller denominations, divisibility, is an essential trait for sound money. Sound money is a term used to describe a type of currency or money that is stable, secure, and widely accepted. It is generally considered to have the following characteristics:
- Store of Value: Sound money should retain its value over time.
- Medium of Exchange: Sound money should be widely accepted as a means of payment for goods and services.
- Unit of Account: Sound money should be used as a standard for measuring the value of goods and services.
- Divisibility: Sound money should be divisible into smaller units to facilitate transactions of varying sizes.
Divisibility is an important characteristic because it allows money to be used for transactions of varying sizes. If a currency is not divisible, it can create problems for people who need to make small transactions, as they may not be able to use the currency effectively. For example, if the smallest unit of a currency is too large, it can make it difficult to buy small items or make small payments.
In the case of bitcoin, its divisibility into small units, such as Satoshis, makes it an attractive currency for small transactions, which can help increase its adoption as a medium of exchange. Divisibility is an essential trait for sound money, and it is one of the reasons why bitcoin and other cryptocurrencies have the potential to become sound money.
The great thing about Bitcoin is that it is a layered digital asset. Bitcoin has multiple use cases, one being as digital gold and a store of value which is great for long term Bitcoin superannuation investments. Layer 2 is where divisibility comes into play with the lightning network that facilitates micro payments that are cheap and fast. Layer 3 is enabling innovation around smart contracts, defi and games. The innovation in Bitcoin layers is limitless in the years ahead.