Date: Sun, 04 Oct 2020 03:45:14 +0000
To: "Mr. Lee Chiffre" <lee.chiffre@secmail.pro>,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Reply-To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Subject: Re: [bitcoin-dev] A thought experiment on bitcoin for payroll
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Good Morning Mr. Lee,

> I cannot front up funds of my own to give
> them inbound balance because it would consume all of my treasury to lock
> up funds.

This is not a reasonable assumption!

Suppose you have a new hire that you have agreed to pay 0.042BTC every 2 we=
eks.

On the *first* payday of the new hire, you *have* to have *at least* 0.042B=
TC in your treasury, somehow.

If not, you are unable to pay the new hire, full stop, and you are doomed t=
o bankruptcy and your problems will disappear soon once your cut-throat new=
 hire cuts your throat for not paying her or him.

If you *do* have at least 0.042BTC in your treasury, you *can* make the cha=
nnel with the new hire and pay the salary via the new channel.

At *every* payday, you need to have at least the salary of your entire empl=
oyee base available, otherwise you would be unable to pay at least some of =
your employees and you will quickly find yourself with your throat cut.


Now, let us talk about *topology*.

Let us reduce this to a pointless topology that is the *worst possible topo=
logy* for Lightning usage, and show that by golly, Lightning will still wor=
k.

Suppose your company only has this one big channel with the network.
Let us reduce your company to only having this single new hire throat-cutte=
r (we will show later that without loss of generality this will still work =
even if you have thousands of throat-cutters internationally).

Now, as mentioned, on the first payday of your throat-cutter, you *have* to=
 have at least the 0.042 salary you promised.
If you have been receiving payments for your throat-cutting business on the=
 big channel, that means the 0.042 BTC is in that single big channel.

You can then use an offchain-to-onchain swap service like Boltz or Loop and=
 put the money onchain.
Then you can create the new channel to your new hire and pay the promised s=
alary to the throat-cutter.

Now, you have no more funds in either of your channels, the to-network big =
channel, and the to-employee channel.
So you are not locking up any of *your* funds, only the funds of your emplo=
yee.

Now, as your business operates, you will receive money in your to-network b=
ig channel.
The rate at which you receive money for services rendered *has to* be large=
r than 0.042/2weeks on average, *otherwise* you are not earning enough to p=
ay your throat-cutter by the time of the *next* payday (much less your othe=
r operating expenses, such as knife-sharpening, corpse disposal, dealing wi=
th the families of the deceased, etc.).
If you are not earning at a high enough rate to pay your employee by the ne=
xt payday, your employee will not be paid and will solve your problems by c=
utting your throat.

But what that means is that the employee salary of the *previous* payday is=
 not locked, either!
Because you are receiving funds on your big to-network channel continuously=
, the employee can now spend the funds "locked" in the to-employee channel,=
 sending out to the rest of the network.
This uses up the money you have been earning and moving the funds to the to=
-employee channel, but if you are running a lucrative business, that is per=
fectly fine, since you should, by the next payday, have earned enough, and =
then some, to pay the employee on the next payday.

Of course there will be times when business is a little slow and you get le=
ss than 0.042/2weeks.
In that case, a wise business manager will reserve some funds for a rainy d=
ay when business is a little slow, meaning you will still have some funds y=
ou can put into your to-network big channel for other expenses, even as you=
r employee uses capacity there to actually spend their salary.

It all balances out.
You only need to keep enough in your channels to cover your continuous oper=
ational expenses, and employee salaries *are* operational expenses.


Suppose you now want to hire *another* throat-cutter.
You would only do that if business is booming, or in other words, if you ha=
ve accumulated enough money in your treasury to justify hiring yet another =
employee.

By induction, this will work regardless if you have 1 employee, or 1 millio=
n.

Regards,
ZmnSCPxj