
bit.ly when launched initially the URL would have been some thing like
http://bit.ly/X where X can be {a-z,A-Z,0-9} i,e 62 Urls using 15 chars and next it grew to http://bit.ly/XX i,e it can support 3844(62*62) Url using 16 chars. finally now they grew to http://bit.ly/XXXXX i,e it can support 916 million with 19 chars, but still it can happen that soon they may have to increase by one more char. Bit.ly has good foresight and so they have reduced the 2 characters in base URL which can now support 3 trillion URLs using current 19 characters (http://jm.p/XXXXXXX).
They also have maintained compatibility between bit.ly and j.mp so, both http://bit.ly/87HKW and http://j.mp/87HKW take you to same URL. They can reduced the url further by trimming http://, but that may need support from Twitter where they have to identify even bit.ly/87HKW as url and hyperlink.

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