Nodes are important, but I do hope that you understand that it needs to be a trade off. Since what would be the point of running a full node if we do not even use the blockchain directly ourselves since we would need to rely on third parties since transacting on the main Bitcoin blockchain would become prohibitively expensive. How many people do you think would run these nodes for the banks, payment processors and like you say a few billionaires? I would argue that the opposite is true, if more people are using Bitcoin directly the more likely it will be that we will have more nodes. Arbitrarily restricting the amount of people that can use Bitcoin directly would therefore not lead to an increase in the amount of nodes. Furthermore in terms of access to governance nodes are not as important in terms of governance compared to the miners, and miners do not even run full nodes, that is why miners would not be effected by this change whatsoever.
BIP101 disincentives full nodes also.
How does increasing numbers of people using the blockchain directly not also disincentivise full nodes? (all under the most aggressive block increase proposal still standing that is BIP101, no less)
Miners do run full nodes, they couldn't mine transactions without access to the full blockchain history. Where you got that opposite idea from I do not know.
If there are more people using Bitcoin there will be more people running full nodes, I accept that it will be more difficult to run a full node however this does need to be a trade off, since the alternative would be much worse in terms of decentralization.
It's actually a direct contradiction. Gavin Andresen, the architect of BIP101, doesn't share your vision at all. He fully admits that BIP101 doesn't solve the scaling problem, and that off-chain transactions are the only way to let everyone worldwide use the network.
I am actually a miner myself, so I do know how mining works. Miners do not run full nodes, the pools do.
And what are the pools using the node for, spending money on groceries? They're mining with them. Also, you're ignoring the peer to peer miners and the solo miners.
And furthermore, the pools are currently in a bad state; several have shutdown since the boom years, and the network is now mostly solo miners (BitFury, KNC and at least one Chinese pool are solo operators, not open access). The only significant individualised pool mining is taking place in China, it's been deteriorating for some years now.
As a miner, how are you unaware of these basic prevailing conditions in your industry, especially seeing as they render your elucidations on the mining market null and void? Centralisation is already the trend, BIP101 is doing nothing to reverse that.
I agree that eventually off chain solutions need to be used in order to scale Bitcoin to a massive scale, however I just do not think that the cut of point for the transaction limit should be one megabyte. It would be better to keep the network as inclusive and inexpensive as possible from the users perspective since it is more important to increase adoption first, this would help Bitcoins survival into the future. I do think however that there should be a block size limit and a fee market should develop in the future, but I do not think that time is now, since the block reward is still high and adoption is still relatively low. Furthermore we need higher transaction volume in order to pay the miners far into the future as well. It can be argued that having a higher volume of transactions at a lower cost will be more profitable for mining then having lower volume at a higher cost.
To think that miners should solo mine and that this will aid decentralization is pretty much a myth, since in order to solo mine it would require a operation that would cost millions of dollars to setup. Solo mining is just not feasible anymore except for the extremely large industrial miners. P2P mining still only represents a very small proportion of miners and therefore the variance is also still to high, and there can sometimes be problems setting up the latest asics for P2P mining as well.
Actually the pool distribution has become more decentralized over the last few months. And more then 70% of mining power is inside of pools with open access. I can agree that BIP101 does nothing about reversing the trend in mining centralization, however it also does nothing to worsen the situation either. Just leaving the block size where it is now does not effect mining centralization either. I personally do not think that mining centralization is even a problem, people worry to much about mining. It is a self balancing system, no matter what happens, mining will balance itself out because of how incentive and the free markets work. I do not think that there is anything wrong with how mining functions today. Yes it is far more centralized then it was in the beginning, but this should have been expected because of economies of scale, but to think that we can go back to how it used to be is unrealistic. I expect mining to become more decentralized over time as more people come into the space and compete with each other. As a miner I am more concerned about having access to the latest equipment, however that is a completely different issue which is not related to the block size debate.
https://blockchain.info/pools?show_adv=no