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The Hero Deflation Principle Premise 1: P (every human is born with a colon) Premise 2: P → Q (if P, then everyone is full of shit) Conclusion: ∴ Q (everyone is full of shit)

---------------------------------------------------------------------------------------------- Spend Bitcoin or Lose It: A Maximalist's Guide to Low-Cost Lightning Spending ----------------------------------------------------------------------------------------------- # Summary If bitcoin is going to be money, real money, not digital gold waiting to be co-opted, people need to use it. This is a practical way to do that: maintain two independent layers, fund Lightning once on-chain at setup, then refill annually over Lightning for about 540 sats and ten minutes of your time. No node. No channel management. No liquidity headaches. No bitcoin left on an exchange. No on-chain fees after day one. Use bitcoin. That's the point. # Why This Matters? @Jeff Booth has made the case repeatedly: if bitcoin doesn't become a medium of exchange, it will fail as money the same way gold did. Gold was excellent as a store of value until governments centralized it, confiscated it, and replaced it with paper promises. Gold's fatal weakness was that you couldn't transact with it at scale. It had to be custodied, which meant it could be co-opted. Bitcoin has the same vulnerability. If it exists only as a speculative asset sitting in cold storage and ETFs, it becomes something institutions can capture, regulate, and neuter. The thing that makes bitcoin different from gold is that it *can* function as peer-to-peer electronic cash. But only if people actually use it that way. This post is for bitcoiners who take that seriously. You want to use bitcoin as a medium of exchange. Not in theory, but in practice, every day. You want to do it with sovereignty, minimal cost, and without it becoming a second job. # The Setup: Two Layers, Completely Independent You maintain two layers: - **Layer 0 (on-chain):** Your self-custodied bitcoin. You buy from an exchange (say, River or Swan) and withdraw to your own wallet immediately. The exchange is a pass-through, never a store. You manage this on your own schedule: DCA, lump buys, whatever suits you. - **Layer 1 (Lightning):** Your spending wallet. Phoenix Wallet, with keys you control. This is where sats flow out to merchants, creators, and services. These two layers touch exactly once: when you open your first Lightning channel by sending on-chain bitcoin to Phoenix. After that, they're completely independent. Your on-chain stack is your on-chain stack. Your Lightning spending is funded annually with a direct fiat-to-Lightning purchase, no on-chain movement involved. # The Problem: Spending Drains Your Ability to Spend A Lightning channel is a fixed-capacity tube. When you open one with 1M sats, all the balance sits on your side: that's what you can send. The other side is empty: that's what you can receive. Every payment slides balance from your side to your peer's side. Spend 100k, and your sendable balance drops by 100k while your receivable capacity grows by 100k. Do this for ten months and you're nearly dry: you can barely send, but you have a million sats of inbound capacity you're not using. In synthesis: the more you spend, the less you can spend, and the more you can receive. The usual fixes all cost money and time on a recurring basis. Submarine swaps (exchanging on-chain bitcoin for Lightning balance) typically run 0.5-2% per swap. Liquid swaps (using the Liquid sidechain as an intermediary) are cheaper but still involve fees on both ends. Circular rebalancing means paying routing fees to push sats through the network back to yourself. All of these require ongoing attention and repeated transactions. # Your Spending Already Solved the Hard Part After twelve months of net spending, you've built up roughly 1M sats of inbound capacity *for free*, just by using your wallet. That inbound capacity is exactly what you need to receive a large refill. No swap fees. No new channels. No rebalancing. The channel is already positioned to accept incoming funds. Once a year, you buy bitcoin on an exchange that supports Lightning withdrawals, send it to your Phoenix wallet over Lightning using that accumulated inbound capacity, and you're back to full. The two sides of the channel reset. Cost: negligible. # The Strategy **Setup (once):** Send say ~1.2M sats on-chain to Phoenix Wallet (or any amount you want). At today's price of roughly $72,000 per bitcoin (February 5, 2026), that's about $864. Phoenix auto-opens channels; total setup cost is roughly 10,000-20,000 sats ($7-14) in on-chain and channel fees. This is the only on-chain transaction the strategy requires. Ever. **Months 1-12: just spend.** Zap on Nostr, buy gift cards on Bitrefill, pay merchants. No action required. Your Phoenix balance gradually depletes; your inbound capacity gradually grows. **End of year:** Buy back the sats you have spent this year on an exchange that supports Lightning withdrawals (Kraken, for example). Withdraw via Lightning into Phoenix. The payment uses your accumulated inbound capacity. No new channels, no splice fees, no on-chain fees. Kraken charges roughly 300 sats (~$0.22) for a Lightning withdrawal. Nothing stays on the exchange; you buy and withdraw in one session. Total time: about 10 minutes. Repeat annually. Entirely on Layer 1. ## What This Costs All prices at ~$72,000/BTC as of February 5, 2026. Setup (Year 0) Each Year After ------------------------------------------------ On-chain + channel fees ~15,000 sats (~$10.80) 0 Lightning withdrawal fee 0 ~300 sats (~$0.22) Routing fees (spending) ~240 sats (~$0.17) ~240 sats (~$0.17) ------------------------------------------------ Total ~15,000 sats (~$10.80) ~540 sats (~$0.39) Over three years: about 16,600 sats total, roughly $12. For comparison, submarine or Liquid swaps at 0.5-1% on 1.2M sats cost 6,000-12,000 sats ($4.30-8.60) *each time* you rebalance, and you'd likely need to do it two to four times a year. That's 12,000-48,000 sats per year versus 540. Weekly Lightning refills from an exchange run about 15,600 sats/year in withdrawal fees alone, plus hours of cumulative hassle. Running your own routing node costs hundreds of dollars in hardware before you even start, plus tens of thousands of sats annually in channel management and rebalancing. This strategy is roughly an order of magnitude cheaper than any active rebalancing approach. # Trade-offs Worth Knowing **Phoenix dependency.** You're relying on ACINQ's infrastructure. You control your keys and seed phrase, so if Phoenix disappears you can recover funds, but it's not full sovereignty the way running your own node is. **Capital requirement.** You need ~1.2M sats (~$864) of Lightning runway. If that's too much at once, scale it down or run the same strategy on a quarterly cycle with ~400k sats. Costs about 900 sats/year instead of 540. **Spending variability.** If you blow through your balance before the year is up, just refill early. The strategy works at any cadence; annual is just the cheapest. **Brief exchange exposure during refill.** You're on an exchange for minutes, not months. Just long enough to buy and withdraw via Lightning. # Variations - **Quarterly refills** if you want a smaller capital commitment (~$290 instead of ~$864, ~900 sats/year). - **Strike for withdrawals.** Strike offers free Lightning withdrawals, which drops your annual cost to near zero. - **No-KYC path.** Buy on Bisq or RoboSats. Adds friction but keeps your privacy intact.

Bitcoin is too important to be left in engineers’ hands when they don’t grasp how much their reputation matters. Mempool will fragment into competing default settings and operations . It will diversify until even the fewest assumptions hold. Exactly what "core" developers were trying to prevent.

Peter Todd is nothing like Satoshi Nakamoto ------------------------------------------------------------- Peter Todd epitomizes the brilliant engineer: deep technical mastery, elegant solutions to defined problems. Yet this very specialization blinds him to systemic effects. Satoshi's genius wasn't technical—it was seeing the Byzantine Generals Problem as human, not computational. Where engineers seek optimal code, Satoshi created messy, resilient consensus. Todd proposes "obvious" improvements that risk hidden centralization. He optimizes trees while the forest burns. This isn't personal failure—it's engineering training that rewards solving problems within systems rather than questioning systems themselves. Bitcoin's strength lies in preventing any engineer, however gifted, from imposing changes through technical superiority alone. The block size wars showed this: engineers saw scaling problems with technical solutions; systems thinkers saw existential threats. Revolutionary systems need minds that think in incentives not algorithms, emergence not specification, antifragility not optimization. They design not for control but controlled chaos. That's why engineers like Todd MUST NEVER have central authority over Bitcoin. Their specialized neural pathways, perfected for bounded problems, cannot grasp the higher-order effects that make or break distributed systems. Innovation requires diverse approaches battling without any single voice able to silence others—precisely what Satoshi built, and what no traditional engineer would ever design. Let's keep Knots growing!