What if BitCoin runs out of bits? OH NO!

What will your great great great great grandchildren DO?!?!

At CoinGeek London, George Gilder (who publicly revealed who Satoshi Nakamoto was in about 2018) peppered Craig Wright with his concerns about the limited supply of satoshis in BitCoin. There are many who have the same question about BitCoin’s limited supply of bits[0]:

George Gilder: “I think [BSV] is a big advance for individual rights and privacy … WHY IS IT CAPPED?”

Also George: “What happens if the entrepreneurs generate demand for a hundred and sixty-two times more money to fund their creations and inventions?”

Send in the Clowns! (HODLers)

How about we use all the bits (satoshis) which aren’t in motion? “Call in the army!”. Call in the ones doing nothing!

If I need 100 widgets to make a system (like an app) work, and I own 80 widgets already, but there are only 120 widgets total (a hard-bounded system), and 40 of them are being “HODL-ed” in wallets, then the answer to my shortage is to “unseat” half of the HODL-ed (motionless) widgets to use in my system. How do I do that? I offer a higher price to the HODLers until half of them sell to me. Or I must learn to use less than 120 widgets, by getting more efficient! Both outcomes are just ducky since free markets allow both solutions at the discretion of the entity in need!

One of the beauties of a bounded system, is that it forces things like recycling — re-use — and makes the world faster. HODL only works in a shortage, because the owners are betting the price will go up due to more demand; well, if there’s a shortage then it did! The idea of HODL is to sell at a higher price, so if the higher price happens, the excess is sold and goes into “velocity” — or rapid use in transactions.

If you’ve studied high school or early college mechanics (Physics) and/or electro-magnetic forces, you know there’s two types of energy: Kinetic and Potential.

Potential is energy that can be used in the future, but is dormant right now, like a fully-charged car battery or a rock on a cliff which can be tied to a rope to yank on something else if you push the rock off the cliff. Kinetic energy is your car burning gas and actually moving. Potential E is like savings or HODL, and kinetic energy is like constructing a building, or building a website application. Kinetic is spending; potential is saving.

Stored energy and expended energy live in harmony, and so does Bitcoin.

RECYCLE:

How did we manage to run the world economy when every nation in the world was on the silver 1 troy ounce standard? Either a mining company had to spend excess capital and mine more silver, very expensively, to add to the “above ground” supply, or mints simply bought silver from people who could afford to sell their above-ground stored supply. With bitcoin you just take away the “below ground” aspect. It’s really not as big a deal as you think, bc as the decades go by, it gets more expensive to find oil and silver in the Earth’s crust. So in bitcoin’s case you just rely upon: instead of making it hard, make it impossible, so the system must use the OTHER method (wrest it out of someone else’s hands by paying a premium) exclusively.

It’s as fair as can be. It’s also very green and very efficient, as bitcoin favors kinetic energy over potential energy, and who doesn’t love economic activity? If we could all exist without savings, the world marketplace would be faster, more efficient, and constantly changing according to economic forces — which is ideal. Money shouldn’t really be HODL-ed, because it’s inefficient. Instead, it should be invested in the most promising things, such that we advance as a race or live more efficiently and in harmony with nature.

Think about how weak mining is anyway. Let’s assume current gold mining production (mining) adds 0.5% of supply to the world’s above-ground supply every year, and it costs a LOT to do even that much. Then 0.0% isn’t that much different.

Again, bounded supply means RECYCLING. Everyone loves recycling, no? I know I do. The higher the price of the commodity (aluminum, in cans), the more likely recycling happens because the rise in price (of aluminum) means the easy-to-assemble above-ground supply is pricier. The harder it is to get the asset out of the ground, the more likely recycling happens.

Looking forward to being bored

The more money is in motion, the less it is at rest. When this is the case, it will be because we actually have stability in the price. What does stability buy us? SPEED! When HODLing doesn’t pay, because price is stable (not going up in a short period of time), no on HODLs! Instead, they keep little in inventory, and spend. This is what will happen after the price of #BSV inevitably skyrockets from adoption. An “S-curve” occurs, with its characteristic vertically-accelerative moment for a period, but then boring price plateau. Price of BitCoin will eventually settle into boringness as everyone has what they need and there is no longer a strong demand overwhelming a reluctant supply.

SPEED: Parallelization increases velocity

In an electrical system, the most important measurement isn’t how many electrons you have, it’s how many electrons are moving at once and how fast. The current.

Speed isn’t just a function of size of engine, it’s also a function of number of lanes. Let’s imagine a math function app which is the most efficient at calculating the solutions to quadratic equations, and it uses bitcoin script and bitcoin packets as the inputs (a, b, c). Everyone starts using it, because it patently is the fastest. But what happens if there’s only ONE function working? If there are many users all demanding answers at once, and the function can only process at a certain speed, say 1 billion transactions per second (ups), then how do you make it faster? You create another function — another machine which operates at the same time or “in parallel”. The second function might itself use just a single satoshi, but it might save millions! So now the app no longer has satoshis WAITING IN LINE to use the function, it’s a release of potential energy into kinetic. We’ve added to the supply of bitcoin by freeing-up frozen/waiting satoshis. Malcolm McLean did this same thing in 1956 by introducing containers and cranes into the shipping business (link to that article: https://sym.re/6GzfjPF ); he began operating seaport cranes in parallel. The faster containers are released from being at rest, the more of them are available, the less containers need to be manufactured.

TOKENIZATION: How might it work out for us? What’s that? Being clever.

Furthermore, how can we get the max mileage out of the 2.1 quadrillion satoshis if everyone is going to create tokens with them? Use denominations. If Snapchat requires 2 billion shares, then issue some shares inside a single satoshi and have the satoshi be a token worth 1 million shares. Surely some of Snapchat’s investors own 1 million shares. Surely the “top five” New York Stock Exchange brokerages have pooled supplies in inventory. Sure, the system might still need some 1 satoshi tokens be worth 1 share. The system will “make change”. The world economy does this every single day since antiquity. Shave and a haircut, two bits!

ADVANCED:

There are also ways to add-up sub-satoshis, and use payment channels. But why worry about this, when right now it’s not even a glint in Daddy’s eye of a problem — and probably won’t be until your great grandchildren have great grandchildren. Plus. Again. Recycling.

The internet with unlimited packets is a sewer right now; each google search doesn’t NEED to yield over 1 million search returns on hundreds of pages no person ever sees.

Conclusion:

Let’s allow ourselves and our businesses to just do what they need to do and take up space out of the bounded but MASSIVE supply of 2.1 quadrillion bits (satoshis). Let the EASIEST solution work its magic: the market price of BSV! When the price is down and the world is “giving you lemons”, make lemonade. When the price is dear, recycle, invest in paralleled machines, and innovate with clever solutions. This isn’t a new concept — not in fair markets anyway.

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REFERENCES:

[0] A “bit”, in the bitcoin protocol, is equal to 0.00000001 bitcoin, similar to a “penny” is 0.01 dollars. There are eight decimal places to the right of the decimal in bitcoin counting system, and 8 places to the left of the decimal (21 million “bitcoin”)

ADDITIONAL:

Look up the formulas and the variables for the two energies above.

Potential energy is based on height (distance) and mass — the main ingredients in gravity. PE = g * M * h

Kinetic energy is based on mass and velocity squared — or acceleration. KE = 1/2 * M * v²

bitcoins are sorta like mass — how many are involved in the transaction? (aka, how many do you need to make your app work?) Velocity squared is like transactions per second which is governed by the BitCoin NETWORK of Nodes/Miners. Interesting thought: increasing transactions per second is the SQUARE of the effect of increasing satoshis in a packet?

TECHNICAL (bitcoin):

Each satoshi represents a “packet” to use internet lingo. Each satoshi can hold at LEAST 4 GigaBytes (enough for a full length high resolution Hollywood movie). So in terms of information storage, multiple 2.1 quadrillion times 4 GB and that’s a LOT of quantized storage lockers. It’s not been done experimentally yet, but it’s also possible that a satoshi could hold more than 4 GB by using more than one OP_PUSHDATA commands within a bitcoin script. Advanced bitcoin script engineers will need to partner with Bitcoin Node operators to experiment with this concept for us to find out. And there are other ways.