This is all very true but it can be addressed by making an increase in difficulty a necessary requirement for an increase in the blocksize limit.
It seems like a reasonable thing, not sufficient on its own but reasonable... (in fact!) I've previously proposed it myself. (not sufficient, among other things that it doesn't do anything to keep incentives aligned, or keep centralization gains moderate.)
Now for under 20% of the cost of an iPad one can purchase a used laptop running GNU/Linux that is perfectly capable of handling a full Bitcoin node. If the 1-2% of Bitcoin users
Yes, but thats only true for a certain set of limits at a certain size. 100MB blocks wouldn't be tolerable on thrifty resources like that today. You may be making an error in reading my message as some kind of opposition instead of tradeoffs which must be understood and carefully handled.
True but this is essentially self defeating. If it turns out that a centralized or semi centralized solution can be competitive with Bitcoin in certain situations then so be it. This however should be a result of true market forces and not an arbitrary limit placed on Bitcoin.
Centeralized services are inherently more efficient, enormously so. My desktop could handle 40,000 TPS with a simple ledger system, giving nearly instant confirmation... physics creates limits for decentralized systems in scale and latency, and thats okay the decenteralized systems are much better from a security perspective. My point about there being alternatives to increasing scaling are not limited to (semi-)centralized systems, though they're useful tools which will exist in the ecosystem, there are decenteralized approaches as well.
I also think it's wrong to think of semi-centralized systems as being in competition with Bitcoin, if process transactions for Bitcoin value they're part of the broader ecosystem; and Bitcoin's trustlessness should enable semi-centeralized systems which are far more trust worthy than what is possible in semi-centeralized systems absent something like Bitcoin. We should be able to adopt them in the places where they make the most sense and have the least risk, rather than try to force all of Bitcoin to the level of centralization needed to make processing $0.25 coffee cup purchases economically efficient while still doing a poor job of it.
Edit: With respect to CryptoNote and Monero, I do see merit in the argument that the fee penalty alone may not be enough to constrain blocksize; however when combined with the difficulty increase requirement the picture changes. As for the specifics of the Monero blockchain there are also other factors including dust from mining pools that led to the early bloating, and we must also keep in mind the CryptoNote and Monero also have built in privacy which adds to the blocksize by its very nature.
Yes, its complicated but it's also concerning. The only altcoins that I'm aware of which have diverged from the current Bitcoin behavior in this front, and did so with the benefits of all the discussions we've had before being available to them, have been suffering from crippling bloat. That they have stronger privacy features which make transactions somewhat larger is somewhat relevant, but the average mixing size on monero is small.. and we may need to adopt similar functionality in Bitcoin (esp as increased mining centralization, partially fueled by the cost of operating nodes makes censorship more of a risk). This doesn't prove anything one way or another, just something to think about the way it was originally presented sounded to me like you were saying it was solved over there, but instead I think that the experience in Bytecoin and monero brings about more questions than answers.
I consider the increase in difficulty requirement on its own a necessary but not a sufficient condition, while the CryptoNote / Monero solution or something similar also a necessary but not a sufficient condition. My proposal is requiring
both as a necessary and sufficient condition. Both suggestions have been made before individually but I have not seen a proposal that required both of them.
The problem of 100MB blocks needs to be considered not just in terms of current technology, but in terms of technology costs down the road. (2, 5 10 years etc.) I run a full Bitcoin node on an over ten year old laptop (that still has its Windows 2000 logo, and a floppy drive), that is way inferior in performance from what one can buy used for say 100 - 200 USD today.
The efficiency of centralization argument is on the surface very valid, furthermore my desktop can also handle "40,000 TPS with a simple ledger system, giving nearly instant confirmation". The problem arises when an individual with value on your desktop wishes to do business with an individual with value on mine. It is then when the fees and costs start to get really expensive. There are two problems here:
First businesses left to their own devices tend to not co-operate with their competitors in order to allow each other's customers to do business. They instead prefer to keep their customers for the most part locked up in their own "walled gardens". Just witness the behaviour of Apple with IOS or while on the subject of coffee Keurig adding DRM to their coffee makers in order to prevent customers from purchasing coffee from suppliers other than those approved by Keurig.
The second is regulatory if we both are in different jurisdictions then we both have now to comply with two sets of regulators. As the number of jurisdictions is increased so does the number of regulators, and even worse the sometimes conflicting interactions between the various regulators each provider has to deal with.
These are the reasons why we see many innovative payment methods that work only within one jurisdiction but only few and expensive options across international borders. Paying 2.50 USD for coffee at the local coffee shop is not where Bitcoin shines, but paying 2.50 USD for a good or service from a provider across the world is where Bitcoin can really shine. Centralized and semi-centralized solutions do have a role to play in reducing blockchain bloat, but cannot not by themselves solve the problem. For example: Coinbase provides both exchange and merchant services to persons in the US, and requires a US bank account. if one of their exchange customers make a purchase from one of their merchants with Bitcoin, this transaction does not need to go through the blockchain. One the other hand if I in Canada makes a purchase from a Coinbase merchant my transaction does have to go through the blockchain, and I, by the way, obtained my BTC from Virtex, who requires Canadian citizenship as a requirement of doing business with them!
One thing to note about Monero and Bytecoin is that Monero has two orders of magnitude the transaction volume by value (BTC or USD) over Bytecoin for very similar capitalizations, so the stress test of bloat should happen in Monero long before it happens in Bytecoin, even though Bytecoin is the older coin.