Argument 2: "Increasing block size would lead to centralizing Bitcoin in terms of mining."
In theory, this holds true as well. The average miner would safely download or propagate a 4MB block but will have a difficult time handling a 40MB block. This means only large miners would survive, leading to centralization.
Counter-Argument: This is B.S. 99% of blocks are found by mining pools that spend thousands of dollars a month on operating nodes across the globe, running on a gigabit fast internet connection. They could handle a 40MB block just as easily as they handle the 4MB block.
In addition, block propagation become easier with existence of compact block where node doesn't broadcast whole block since most other node already have TX data on their mempool.
It is not about storage. It is about verification time. I
Hmm i disgree, notice that i mentioned handling and propagating blocks only for miners, because for a non-miner node there is no "rush" to download or verify a block, storage is more important.
But anyway, for a good hardware it takes about180 seconds to do all of this
- Download a 2MB block
- Empty some space if need
-Verify all transactions
-deal with the mempool and construct a brand new blocktemplate.
A non-mining node doesn't need much processing for a block, and should be able to process a block size of a few hundred MBs in no time, this is only a sub-issue for miners not all nodes.
But longer verification time means longer time to propagate block to most/all Bitcoin nodes. Pool and miner will waste more time/resource before their node receive newly mined block.