Let's imagine Bitcoin as a big digital piggy bank where you store your money, but instead of coins, we have something called sats (short for satoshis, named after Bitcoin's creator).
- Sats are the smallest unit of Bitcoin. Think of them like tiny candy pieces; you can have a lot of them, but each one is very small.
Now, when you want to send or receive these sats, you use something called UTXO, which stands for Unspent Transaction Output. Imagine every time you get or send sats, it's like getting or giving away a candy bar:
- UTXO is like an unopened candy bar in your pocket. If you want to give someone 10 candies, but you only have a bar of 20 candies, you give them the whole bar. They take 10 candies, and you get back a new bar with the remaining 10 candies. Each of these bars (or parts of bars) is a UTXO.
When you want to move these candies (sats) around, you might have to pay a tiny fee. This fee is measured in sats/vB (sats per virtual byte):
- sats/vB is like how much candy you have to give to the candy shop owner for them to let you move your candy bars around. If moving your candy bar takes up a lot of space (more virtual bytes), or if lots of people want to move their candy at the same time, you might have to give more candy (sats) as a fee.
So:
- UTXO is your candy bar or piece of candy that hasn't been used yet.
- sats/vB is how much of your candy you need to give away to move your candy bars around in the candy shop (Bitcoin network).When you're playing with your friends and want to trade or share candies, you think about how many candies you'll need to give away just to make the trade happen. That's kind of like what happens with Bitcoin, but instead of candies, it's all digital, and instead of a candy shop owner, it's the Bitcoin network deciding how much you need to pay to move your sats around.