Hi Brenton! Thanks for your questions,

1. Yes, they are ordered randomly.
2. We checked other denominations but it seems like people who came up with cash bills already thought about those in a pretty much optimal way. It gives a good balance between cost/privacy for any amount. It would be great if more wallets would start to use the same denominations.
3. Yes. Introduce even smaller denominations up to maybe 1k or maybe even 600 sat. Then the sender would have to round (ceil) sending the amount to the nearest denomination, so no below lowest denomination “dust” would be sent. On the change part, the sender would have to increase miner fees in the way so he would not generate any non-denominated output for himself.

We are still iteratively changing and tuning the algorithm as we get feedback from usage. So this is still work in progress.

One thing to mention here is, we are also consolidating change, as we keep track of how much of each denomination each wallet has. If we would not, certain denominations would keep on pilling based on average amount user transact every time. So it’s a mixture of splitting and consolidating.