All that said, I do cringe just a little at the over-simplification of the video... and worry a bit that in a couple years it will be clear that 2mb or 10mb or whatever is totally safe relative to all concerns
gmaxwell, it is always a relief to read your level-headed analysis of a problem after a serious amount of arm-waving and hyperbole.
The
video is completely dishonest from the point where data-centers is mentioned. It makes the false case that up to 1MB blocks allow for decentralization and anything larger needs PayPal-like server farms for each node. It may be that the network would hum along fine with 2MB or 5MB blocks right now. We just don't know.
If Peter Todd had run NASA's Apollo space program no astronauts would ever have landed on the moon because they would still be doing Earth orbit missions, tinkering with the technology.
What is desperately needed is software that scans the Bitcoin network and provides metrics of exactly how much decentralization exists (by what ever measurement is sensible, such as propagating node-hours up-time) and plot this against average block size. Blocks are now about 0.18 MB each, so there is still time to gather stats and project how much fall-off (if any) occurs at values above 1.