This is the first time this year I see an interesting thread/post, thanks for that.
1MB can be considered for preventing spam. Maybe he didn't think if bitcoin could become so popular and also there aren't some things considered like what will happen after
...if more than 1,000 miners are needed for Bitcoin...No amount of miners are needed for Bitcoin. Difficulty scales with the hashrate. The amount of miners is a result of people thinking Bitcoin has value.
The "amount of miners" are simply the number of decentralized participants in the consensus decision. Today, that number is something like 3 or 4. There are 3 or 4 deciders on the consensus decision: the 3 or 4 mining pools that have majority hash power under their decision. About 10 deciders, even though they cannot go against the tacit agreement of the 3 or 4 majority deciders, make up the essence of bitcoin's consensus deciding power.
To illustrate what this means: suppose that you are the owner of coins in an address that the 3 or 4 mining deciders are angry about. If these 3 or 4 deciders really don't want you to transact, they can refuse your transaction (no matter what fee you pay). If these 3 or 4 deciders also decide that they won't mine on top of another block that contains your transaction, mined by a smaller pool, then they will orphan these blocks. By the time that the other significant mining pools, not understanding why their earlier block is orphaned, get the message, they will also avoid putting your transaction in their block (even if they don't have anything against you), in order for them not to waste their blocks: they can't win against the majority hash rate that will always orphan their blocks faster than they can construct on it.
The actual miners selling their hash rate will never know. The block chain that is built is perfectly OK. Your transaction remains in the pool. No miner decides to include it, because 3 or 4 entities decided that your coins were excluded from the system. Their consensus decision is in agreement with bitcoin's protocol. No "full node in Joe's basement" will alert Joe that something is fishy.
The power of consensus is in the hands of 3 or 4 entities.
Let us see what this means. Suppose 3 or 4 entities collude and are pissed against a single exchange. They know that exchange's hot and cold wallets. They decide that no transaction from one of these wallets is going to make it in the block chain. If they are serious about it, they will never include one of these transactions, and will orphan every block that does. People will realize that they cannot withdraw from that exchange. They will think there's something quite fishy with that exchange. The transactions will never be confirmed. They will see the transactions in the mem pool, and never in the chain.