A bit is a basic unit of measurement in the context of cryptocurrencies. It represents a fraction of a Bitcoin, specifically one hundred millionth of a Bitcoin (0.00000001 BTC). Bits provide a more manageable way to express smaller amounts of Bitcoin, making transactions clearer for everyday users.

For example, instead of saying you need to send 0.005 BTC, you could say you’re sending 500,000 bits. The term also helps in pricing and valuating smaller transactions, as Bitcoin can often become cumbersome to deal with at smaller scales.

With the rise of microtransactions, using bits has become more relevant, allowing for easier comprehension and execution of small trades or purchases. In summary, bits enhance usability by breaking down Bitcoin into smaller, more understandable units, facilitating easier exchanges and transactions in everyday dealings.