A satoshi is the smallest unit of the Bitcoin currency. It represents one hundred millionth of a single bitcoin (0.00000001 BTC).
As with traditional currencies, cryptocurrencies require explicit denominations. This is important to provide for interoperability between users and software on the network. The unit has been named in collective homage to the original creator of Bitcoin, Satoshi Nakamoto.
With the ability to affordably transact in micropayments, the satoshi has even greater practical relevance in the Lightning Network than the underlying Bitcoin network.
On 15 November 2010, in this post, ribuck on the Bitcoin Talk forum suggested calling 0.01 BTC a "satoshi". At the time, 0.01 BTC was the smallest unit that could be displayed by the user interface in the standard Bitcoin Core client, even though the protocol supported eight decimal places.
On 10 February 2011, ribuck proposed naming the smallest base unit (0.00000001 BTC) either an "austrian" or a "satoshi".
Then, on 18 February 2011, marcus_of_augustus posted "100 million satoshis = 1 bitcoin. Are we agreed?" to which someone responded "affirmative". This usage has persisted.
According to ribuck, Satoshi Nakamoto referred to the base unit simply as a "coin" in his writings.