Re: SatoshiDice, lack of remedies, and poor ISP options are pushing me toward "Lite"
I think it is agreed that most Bitcoin payments won't take place on the blockchain. e.g., with tx replacement you can have one transaction carry multiple payments, and there can be various 3rd party services (I'm using "various" in a mostly positive sense - Bitcoin enables possibilities with good tradeoffs, better than the current banking system) . So 1B daily payments doesn't mean 1B daily transactions. The more transactions can actually make it to the blockchain, the lesser the overall "tax" (in the broadest sense) of using additional layers.
Exactly.
Bitcoin is fundamentally not very good as a payment network. Global visibility is not compatible with high scalability and the security global-visibility provides somewhat unnecessary for pretty much anything short of the inflation resistance of the system... 99.999999% of the world does not care about the security of every dumpling bought in china. The nature of Bitcoin makes many worthwhile mechanisms like anti-fraud and instant fairly-firm resistance to reversal hard or impossible without attentional layers. Bitcoin needs to be something of a payment network to be useful at all and the better of one that it is the less costly payment networks will and must be, so it's desirable to make it the best it can be but it's not worthwhile to compromise the unique values that make it worth having, since no amount of compromise can free you from payment networks.
I think if more of the effort spent speculating on likely impossible modifications to Bitcoin itself (I don't mean the block size stuff as much as stuff like demurrage) was spent on inventing decentralized payment infrastructure we'd make a lot more progress. Remember, that one of the attractions of Bitcoin is that there is no centeral bank telling you that you can't invent new payment systems. Bitcoin has solved the hard part in this ecosystem: invent a purely decentralized digital asset which people will recognize as valuable. Now interested parties can go figure out how to optimally exchange it with others. Plus, when building a new system you're free to design in whatever features you think are important without being called a thief, and the public is free to choose not to use it. Bitcoin gives you an existing cryptocurrency ecosystem so getting value into it at all isn't a problem. Win win win.
It makes me sad that in so many technology discussions people penalize things for being more flexible. Were it possible for bitcoin to be usable with no payment network functionality at all it would still be awesome. It seems when something can do five different things all the 'experts' on the Internet think it's appropriate to demand that it be the absolute best at each thing and that it sucks if it isn't. Sorry kids: Real engineering is all about compromises.
