Crypto moves fast and if you’re not paying attention, it’s easy to lose track of what’s new in the community. For example, in 2023, you may have noticed talk about “rare sats” being thrown around by people in the NFT and Bitcoin communities.
But what are rare sats and why are they important to the ever-growing Bitocin ecosystem? Let’s talk about where they came from and what role rare sats play in the crypto space today.
What is a Satoshi?
Satoshis, often abbreviated as "sats," are the smallest possible units of Bitcoin. One satoshi is equal to one hundred millionth of a Bitcoin, or 0.00000001 BTC. The name for these small denominations of BTC pays homage to Satoshi Nakamoto, Bitcoin’s pseudonymous creator.
Dividing a bitcoin into sats serves several purposes. Firstly, this divisibility addresses the need for efficient network usage. Network efficiency aligns with the broader goal of promoting accessibility and inclusivity, especially in developing nations. Sats also make Bitcoin more adaptable to a wide range of economic activities beyond “HODLing.”
One of the key reasons sats are important in the Bitcoin world is because they serve not only as a unit of account, but make holding and spending BTC more practical. Breaking down a single bitcoin into satoshis opens the door for microtransactions or micropayments. This means enabling much smaller transactions on the network.
Micropayments are extremely small transactions, often used for day-to-day purchases or trades on Bitcoin. These transactions are particularly valuable for users who need to make quick, low-value exchanges. For example, buying a coffee with bitcoin, making in-game purchases, or sending BTC tips are microtransactions. Think of using sats like putting quarters in a gumball machine rather than being stuck with a $100 bill.
Sats enable micropayments which make the Bitcoin network more practical and scalable. Expanding the utility of Bitcoin also facilitates wider adoption on a global scale.
What are Rare Sats?
“Rare satoshis” are a very special kind of sat. These NFT-like collectible sats came on the scene as a result of Ordinal theory, which was introduced to the Bitcoin ecosystem at the start of 2023.
The Ordinals protocol, using capabilities unlocked by the Taproot upgrade and SegWit technology, allows the inscription of metadata directly onto individual satoshis. This innovation transforms satoshis into unique, identifiable digital artifacts — similar to non-fungible tokens (NFTs).
The rarity of satoshis is tied to specific events on the Bitcoin network like when a sat was mined. A sat’s rarity is determined through the Rodarmor Rarity Index (created by Casey Rodarmor) and its walkthrough of “sattributes,” which define different levels of rarity. The term sattributes refers to the attributes that distinguish one satoshi from another, contributing to its rarity.
Common: Any sat that is not the first of its block
Uncommon: The first satoshi of any block
Rare: The first sat of each difficulty adjustment period
Epic: The first sat of each halving epoch
Legendary: The first sat of each cycle
Mythic: The first sat of the Genesis block
These sattributes provide a structured framework for identifying and valuing rare satoshis.
Ordinals facilitate the inscribing of sattributes onto satoshis, allowing the creation of customized, Bitcoin-native non-fungible tokens. For instance, the first satoshi mined after a difficulty adjustment period or a halving event is classified as rare or epic, respectively, indicating its unique position in the blockchain's chronology.
However, some rare sats are uninscribed, meaning they are not indexed with customized metadata. This lack of inscription, paradoxically, adds to their rarity. The scarcity of these uninscribed rare sats increase their value because they exist in their raw, unaltered state on the blockchain.
What Are Some Rare Sat Collectibles on Bitcoin?
There are some very impressive, historical events in the world of Bitcoin and these often mark highly collectible rare sats. Here are a few types of collective sats.
Pizza Sats
These satoshis are associated with the historic purchase of two pizzas by programmer Laszlo Hanyecz for 10,000 Bitcoins in 2010. This transaction is famously known as the first real-world transaction using Bitcoin and is commemorated annually on "Bitcoin Pizza Day."
Palindrome Sats
These satoshis feature numeric sequences that read the same forwards and backward, similar to linguistic palindromes. The appeal lies in the numerical symmetry, adding an element of uniqueness to these rare satoshis.
Block 9 Sats
Block 9 sats are part of the very first block ever mined on the Bitcoin blockchain. Mined by Satoshi Nakamoto in January 2009, Block 9 marks the foundational block that set the entire Bitcoin network in motion.
Hal Finney Block 78 Sats
Designated to satoshis mined from the block that marked a pivotal milestone in Bitcoin's evolution — the first block mined by someone other than Satoshi Nakamoto. Hal Finney, a significant figure in the cryptocurrency community, mined Block 78.
Vintage Sats
Originating from the earliest 10,000 blocks of the Bitcoin blockchain, Vintage Sats offer a glimpse into the foundational period of Bitcoin. These satoshis carry historical weight, representing the evolution of Bitcoin from its nascent days to its present prominence.
First Transaction Sats
Denoting satoshis involved in the inaugural transaction between Satoshi Nakamoto and Hal Finney on January 12, 2009, these units mark a seminal moment in cryptocurrency history.
Nakamoto Sats
Satoshis believed to have been mined by Satoshi Nakamoto, the visionary creator of Bitcoin. The true identity of Satoshi Nakamoto remains unknown, adding an air of mystery to these satoshis.
Conclusion
The advent of Bitcoin Ordinals and, subsequently, rare sats, has kicked off a new excitement in the Bitcoin world. Surges in transaction volume due to Bitcoin NFT collecting drove much of the network activity in 2023. But collecting your favorite rare sats isn’t the only reason they’re important.
As with many of the new innovations that happened on Bitcoin in 2023, rare sats are opening the door for more use cases and applications for the Bitcoin blockchain. A new era of Bitcoin began with Ordinals, continued with rare sats, and still remains to unfold as inquisitive programmers and crypto enthusiasts discover new ways to classify and use satoshis.