Quote from: Peter R on August 17, 2015, 07:28:18 PM

Quote from: domob on August 17, 2015, 06:31:00 PM

Quote from: cypherdoc on August 17, 2015, 02:01:28 PM

Quote from: Erdogan on August 17, 2015, 01:51:23 PM

We have been reminded, by the pretention nodes, that there is always a risk of a largeblock being orphaned, especially the first one, then the next one that is larger, and so on. Not only due to timing, verification of the block, the technical stuff, but also the willingness of others to build on it. In business, the risk transforms directly to cost.

After a block of 2MB for example, the risk is reduced for blocks up to and including that exact size. We will therefore in the future see step increases in the blocksize, with retraction in between due to the varying demand. The typical leg up, stability, another leg up pattern, all market based.

Yes, tip toeing forward according to fundamentals, both technical and economic.

"Step increases" and "top toeing forward" won't help much here. If the main concern is acceptance of the larger block (which I think it is and which you seem to imply with the reference to pretention nodes), then 1.001 MB and 8 MB blocks are, roughly speaking, "the same". A node either accepts both (if it allows larger blocks) or it rejects both (if it does not). So while I agree that miners may be reluctant to accept (and especially build on their own) large blocks, I don't think there is any particular reason to "tip toe forward" once they are on a chain that is invalid according to the old rules. Unless, of course, verification and relaying timing is a concern. But then the fork should actually have never been done in the first place and XT failed already during the planning stage.

I think Erdogan's insight into the game theory behind the block size limit was correct.

But to recognize his insight, I think we need to stop thinking in terms of "valid blocks" and start thinking in terms of "valid transactions." All blocks that are composed exclusively of valid transactions are valid.

Now instead of thinking that only Core and XT exist, imagine that there are dozens (and in the future possibly hundreds) of competing implementations of Bitcoin. Each implementation has its own rules for what block size it will build upon. From this viewpoint, the "effective limit" is the size of the largest block that's ever been included in the Blockchain. If a miner wants to create a larger block (e.g., to collect more fees), then he has to weigh the chances that his block is orphaned with his desire to create a larger block. If we imagine that the block size limit across the network forms some distribution as shown in the chart labelled "NEW THINKING" below, then, since the miner can't be 100% sure what this distribution is, it is rational for him to use the tip-toe method to minimize risk.

cost of mining a larger block = self regulating block sizes