The chain can be pruned. Whether full nodes are storing the entire blockchain isn't the major issue. Storage space is a bottleneck and can stop people from running full nodes, but bandwidth and latency are more pressing issues.


Exchanges and basically any service who credits accounts based on the blockchain need to run full nodes.

I'd say that the more people that run full nodes, the better. Without full nodes enforcing the consensus rules, miners and economically important nodes can collude to change the protocol. If the chain will be hard forked, SPV nodes have zero say about it. Only full nodes are relevant in hard fork attempts.


Larger blocks cause propagation delays. This increases orphaning rates, which disproportionately hurts smaller miners and will eventually force them off the network via unprofitability. Miners can sidestep these problems by centralizing -- pooling hashpower, colocation. Less mining entities, each with larger market share = bigger threat of transaction censorship, government targeting of miners, 51%/selfish mining attacks, political hard fork attacks, etc.

Larger blocks also cause increased bandwidth requirements. Data upload limitations are the primary bottleneck here. People who don't have access to unlimited internet data will become increasingly likely to shut down their nodes as it begins to interfere with streaming, gaming, file sharing, etc. The less full nodes there are, the easier the consensus is to attack.