[jerfelix]

Right now they subdivide to 8 decimal places. .00000001

With minimal change to the protocol they could subdivide to much smaller units.

I think "bitcoin" is a confusing name, because it's really more like a group of account numbers, which can have money with 8 digits of precision to the right of the decimal point.

Think of a Bitcoin Address(es) as your account number(s), and your Private Key as your ATM card, PIN, and signature all wrapped in one.

If someone sends me 50 bitcoins, I have it in my "account" in the giant ledger in the sky. If I want to send 3.5 of them to someone, what might happen is that I create a transaction that sends 50 bitcoins to two different places... 3.5 to someone, and 46.5 to another account (of mine, my change!) in the giant ledger in the sky.

Or for simplicity, think of them like rewards points, and don't try to make it too complicated.

[brenfrow]

If one bitcoin is some encrypted id or whatever how can I transfer 0.00000001 of them to someone else?

[speeder]

There are no such thing as "one bitcoin".

Bitcoin is a protocol actually, that store numbers in a peer to peer ledger, what you do is change the values on the ledger, and the encryption is only to ensure the transaction was not a forgery.

Right now the protocol supports as the smallest one the "satoshi", but a "satoshi" is too small, so people for day to day use "BTC".

0.00000001 of a BTC is a satoshi.

But if Bitcoin really gets used in the mainstream, BTC might be valued in the millions, thus the protocol can be more or less easily changed to use a unit smaller than the satoshi.