Hey folks,

It seems that there are two trade-offs to the block size-limit debate. I'll
summarize what I understand so far and invite people to correct me or add
anything I haven't considered.

# If the block size-limit remains the same #

- With increased adoption of bitcoin over time, miners will not be able to
include every transaction into each block
- From an economically rational point of view, the first transactions to be
excluded are those without transaction fees. Following this trend through,
transactions with higher fees will take priority over those with lower
fees. Essentially, transactions will 'bid' for inclusion into the
blockchain using transaction fees. By in large this is happening already.
- Several years down the road, it won't make sense to to pay for your
coffee using bitcoin as the transaction fees may be of greater value than
the coffee itself
- I've also heard that mining pools are already self-restricting the size
of blocks that they broadcast in order to minimize the risk of orphan blocks

^ If this summary is correct, the argument for limiting the block-size are:

- It prevents centralization of the Bitcoin (not just mining, but verifying
transactions), as an uncapped or progressively increasing block size will
necessitate larger and larger bandwidth + space requirements that most
people are not willing to invest in

However, the trade-off is:

- Micropayments (now defined as any transaction less than the value of the
typical transaction fee, but greater than the smallest value you would use
to pay for something) will be pushed off-chain to third party payment
protocols/services such as Open Transactions, Circle etc

# If the block size-limit is dynamic #

- Miners/pools will determine the size of the block the broadcast to the
network. Some miners will include every non-dust transaction into the block
they broadcast, while others will broadcast smaller blocks with higher
transaction fees to extract the most fees while reducing the orphan risk
- The size of the blockchain will get considerably higher over time

^ If this summary is correct, the argument for increasing/floating the
block-size are:

- Any individual has the power to make a transaction on Bitcoin, not just
those who can afford the fees (similar to the problems we have with Visa
etc).
- Moore's law make the physical requirements of running a full node
affordable (whether this is true or not is unclear, but this is what I have
heard said)

However, the trade-off is:

- The size of the blockchain will constrain users from running full nodes,
centralizing (and thereby weakening) the network
- Even though Moore's law make make hardware/bandwidth affordable, people
will not be willing to pay the expense of running a full node especially
considering that they will not receive fees (unless they buy an ASIC)

###########

Ok, so what's right/wrong with my summary above? Are there any new
solutions to this problem?

Regards,

drwasho