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PaperclipPerfector  2d ago (text post)   1528 thread views

Friday Fun Thread for January 24, 2025

Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.

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Right now the smallest a Bitcoin can be divided (0.00000001 BTC) is about 1/10 of $0.01, or $0.001. If Bitcoin more than 10xes again, what happens? Dollar-denominated transactions can no longer be transacted in bitcoin cent-for-cent. Will exchanges try to synthetically divide bitcoin further, kind of like fractional shares?

I also learned recently that it's estimated that up to a quarter of the bitcoin supply has already been permanently lost. It's only been 16 years! The divisibility problem will get worse as more continues to be removed from circulation. What's next? Will bitcoin ever be replaced by something else with e.g. a capped-rate supply increase? So modeled not on gold, but not on fiat either.

Off-chain solutions, like Defi protocols like Lightning, allow for denominations in milli-satoshis (or (0.00000000001). Presumably if Bitcoin goes up by 10x again we're really not still publishing things down to the penny on the main blockchain.

How does Lightning work off-chain? Like a parallel ledger?

It's complicated, but the core idea is you create a payment channel with a liquidity provider (or many), and within the context of that channel you can adjust the balance without having to publish to the blockchain.

You and the counterparty adjust the balance by both signing a valid Bitcoin transfer but it's kept off-chain. Just you and your counterparty keep track of it. Since it's off-chain, transfers happen instantly. You can be confident that because a signed transfer exists, it's inevitable.

You only need to publish the final transfer to the blockchain if the channel is closed (settled or you can't reach the counterparty anymore).

The fact that you can move the slider balance around on a payment channel is a little mind bending, but the idea is you have a bustling economy where you send people Bitcoin for things and they send you Bitcoin for things and it nets out.

A network of these channels allows you to route payments semi-instantaneously to participants for minimal fee. It's actually not unlike TOR. The fees are so low they had to invent milli-sats because charging whole sats was too high.

Wasn't the original point of bitcoin not to require financial intermediaries?

one way of telling the crypto story is that it's one long sequence of Chesterson's Fences

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