Quote from: jonny1000 on October 13, 2014, 10:54:15 PM

I apologise that I was not being very clear, I was talking about miners manipulating the block size limit upwards or downwards in the hypothetical scenario that the block size limit is determined dynamically by an algorithm, for example the one I mention above linking the block size limit to aggregate transaction fees. What do you think on this proposal?

I think I did understand what you were saying. I was trying to point out that miners already have control of the size of blocks they publish. And therefore - collectively - miners have control over how fast the blockchain grows. But that freedom is not absolute. There upper and lower limits. Since blocks with a size less-than-zero is mostly an absurd concept, we can safely put just a few bytes as the smallest possible block. The biggest possible block size is what we are discussing here. It basically serves as a check that full nodes can use against the miners, meaning nodes can audit the service the miners are providing and otherwise connect and communicate about the sate of the network. Any proposal that gives the miners some automated way to influence the MaxBlockSize could be used to make the blocks so big as to promote centralization of the nodes. Individuals would loose there ability to audit the network.

Miners currently do influence of the MaxBlockSize variable, but the influence is based human communication, persuasion, and lobbying within the ranks of the Bitcoin Community. If MaxBlockSize was algorithmically controlled, with the formula taking as input conditions the miners had some form of control over, then MaxBlockSize could be raised or lowered by the miners directly, without the consensus of full nodes. It would no longer be a check.

Quote from: jonny1000 on October 13, 2014, 10:54:15 PM

Why do you say that miners can create their own cartel to create artificial scarcity? Perhaps they can do this, but a healthy Bitcoin network has a competitive and diverse mining industry where this may not be possible. If miners collude together in this way then Bitcoin has more serious problems that this scalability issue.

I agree that a max block size is also helpful to keep the network decentralised and available to the interested individual, both financially and practically speaking as you say, however I postulate that the max size is also necessary for another reason:

Artificial scarcity in block space -> higher aggregate transaction fees -> higher equilibrium mining difficulty -> more secure network

No scarcity in block space -> lower aggregate transaction fees (yes a higher volume, but no "artificial" profit) -> lower equilibrium mining difficulty -> less secure network

That's why I said cartel, not collude. Perhaps I should have used the word 'association' to describe miners working together in a constructive fashion. Miners collaborating is itself not a problem. In fact, they do work together all the time and the shared computational output is the blockchain. If at some future point a majority of the miners start behaving badly, the community will respond. if the MaxBlockSize was very large, and the dynamics of the bitcoin system were causing the hashrate to fall, I would expect miners to get together and solve the problem. That could include a miner-only agreement to only publish blocks of a certain size, to drive up fee requirements. This is not a proposal to raise MinBlockSize.