"That said, but nesting sha1 calls you are reducing the size of the output set at each step"
I don't think so otherwise finding collisions would be trivial. What you do when using nested SHA1 is just to run a cryptographically secure PRNG with a 160 bit internal state.
The in-depth security means you design your system so that it doesn't fall apart if only one of the pieces fall.
As for your comment on the PRNG, it's actually not a very good design. You would rather use a cipher in stream mode which is indeed fed from a hash, because the cipher will have a better and more predictable behaviour over time.
I however don't understand why people were repeating bcrypt as a mantra on your git pull.
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"That said, but nesting sha1 calls you are reducing the size of the output set at each step"
I don't think so otherwise finding collisions would be trivial. What you do when using nested SHA1 is just to run a cryptographically secure PRNG with a 160 bit internal state.
The in-depth security means you design your system so that it doesn't fall apart if only one of the pieces fall.
As for your comment on the PRNG, it's actually not a very good design. You would rather use a cipher in stream mode which is indeed fed from a hash, because the cipher will have a better and more predictable behaviour over time.
I however don't understand why people were repeating bcrypt as a mantra on your git pull.