Agreed. Hopefully pools and major solo operators can see that their long term profitability is based MORE on the growth of Bitcoin than the short term orphan cost. Hopefully large pools are aware they don't need universal support. If 70% of hashpower agrees to produce larger blocks (say 500KB avg) for the good of the network. It cuts the orphan cost by 70%. Still I think the orphan cost does highlight the reality that miners are going to be increasingly reluctant to devote more space to free tx. This is something users will have to come to grips with. Including a fee and waiting hours or days is unacceptable (although it is often for non-fee reasons) however no fee tx should be considered charity by users and if someone does you an act of charity in an hour, or day, or week well you got what you paid for. The default behavior of most clients should probably be changed to include the "min fee" on ALL txs not just low priority ones. If users want to they could change this but they should be warned "Including no tx fee may result in delayed confirmation times". Enforcement for relaying at node level should still only be on low priority.
It is somewhat ironic that this is more of an issue due to the higher exchange rate. The min fee on low priority tx was lowered due to rising exchange rate. Today 3.3 mBTC is ~$1.50. Ouch. However if Bitcoins were worth less it would be less of a cost. Since Bitcoin is often used as a proxy for USD a 5 mBTC fee (which more than covers orphan costs) is more viable at a lower exchange rate.
I love this thread. Only 1 year ago the likes of Mister Bigg were going nuts saying miners would create humungous blocks full of 1-satoshi paying transactions, because there was no reason not to. Therefore block size shouldn't be lifted.
Now people are moaning block size isn't increasing fast enough.
There's no better evidence that a block size limit is no longer necessary - no-one apart from the odd Eligius block is even approaching 1MB. Miners are forgoing the fees. Just scrap the cap. No-one is forcing miners to build on some 4MB block full of spam transactions; they can always ignore it and teach the spammer a lesson. Free markets will sort it out.
And with 1 BTC worth $800 or more, screwing around is no longer cheap.
I think a cap is still useful. The cost to massively bloat the blockchain remains a viable threat, and at a tiny fraction of what it would cost to 51% the network. Bitcoin has a somewhat unique cost vs benefit scenario. There is actually little direct cost to put a tx in a block however the true cost is the total storage, bandwidth, and memory requirements of all the full nodes combined and most nodes are not miners.
While miners who are economically motivated are unlikely to do something stupid (like create a 1 GB block full of millions of txs with a 1 satoshi fee), an attack may not be economically motivated and at this point dumping hundreds of thousands of GB of additional blockchain size could slow adoption.
That being said I am much more in favor of raising the cap possibly to 10 MB (or even 5MB) to buy us the community the time to fully analyze all the possible implications of future block sizes (no cap, floating cap, high fixed cap, etc).