Increasing the block size does not lead to increased mining centralization.
Interesting. Do you have any proof for this conjecture?
I have explained it in more detail here in the article that I written on the subject:
https://bitcointalk.org/index.php?topic=1164464.0It is not conjecture since my theories are based on the factual observations of how the Bitcoin network functions today. To simplify the argument for you however it is based on the fact that the vast majority of miners do not run full nodes for the purpose of mining. The pools run the full nodes for mining instead, that is why miners are not effected by the increased difficulty of running a full node, because miners do not run full nodes for the purpose of mining. This is why increasing the blocksize does not lead to increased mining centralization.
Not sure I get it. Either way, miners, be it pools or solo miners, have to run full nodes (if they are actually doing their job properly). The centralization pressure here mainly comes not from validation costs, but from propagation costs. And a lot here depends on the network topology (e.g. The Great Firewall), i.e. the limiting factor is latency, not bandwidth. It's been discussed many times here.
Try and understand what I am saying here, it is a very important distinction. If you have read my article you will know I have made the comparison to pools acting like a type of representative democracy for miners within a free market. There are no real solo miners in Bitcoin anymore, to be a solo miner it requires an industrial scale operation to counter the variance and even then the pools are still used instead, even if it is a private pool. I am a miner and I am not running a full node, I point my hashing power towards slush and they run the full node for me instead. This is how the vast majority of mining power operates today and this is the reality of Bitcoin mining today and it does work. In the case of the Chinese miners, they could point their hashing power towards a pool outside of china, or Chinese pools can be setup outside of china as well if that specifically became a problem for them.
While I didn't read your post, I see your idea clearly. But it doesn't address the fact that larger blocks come with a centralization pressure for miners. You're trying to argue that if something happens (what), you can vote by moving to a different pool.
You are ignoring:
1) that current mining is industrial-scale, and is largely behind particular pools,
2) that staying with a large pool is more profitable.
What we have now is already bad, by controlling a handful of pools you can already censor transactions. What's worse, with larger blocks you make starting new pools more costly, the entry bar is getting higher. That's all centralization pressures.
What we have now is how Bitcoin will remain unless we make drastic changes to how Bitcoin functions in regards to mining centralization. Which is in part why I think that we should accept how Bitcoin functions today, and that having between ten to twenty pools will most likely be the continued reality for Bitcoin for a long time, increasing the blocksize does not change this dynamic whatsoever one way or the other.
We depend on miners to do what is best for Bitcoin, this works because they are incentivized to do good. This is why pools are not approaching fifty one percent any more. In the same sense we will rely on the miners when censorship happens on the pool level, to move their mining power over to another pool that does not censor transactions, I think miners will do so because Bitcoin derives some of its value from its permissionless nature. It is good to keep in mind that it only takes one small pool to include the censored transactions to thwart the efforts of the tyrants. I also do not think that every jurisdiction in the world would fall under this type of censorship and oppression as well, which is what would be required for such censorship to be successful. The other scenarios for censorship imply the control of over fifty one percent of the hashing power, which if that is the case Bitcoin will have failed anyway. Also smaller pools are not less profitable they just have more variance, obviously however you would not want to be in a pool that has under five percent of the hashpower depending on the timescale of your mining operation of course. Variance works both ways however, some people might be more prone to take the gamble and accept the risk. The bar to starting a new pool is already very high but not because of the cost of running a full node but because new pools face a chicken before the egg problem so to speak, how to attract enough mining power to make the pool feasible in the first place. However if the pools do act irresponsibly then the demand for new pools would increase.