What do you think? Is the chronic decline in hosts a genuine problem for the backbone p2p network?
No, I don't think it is a problem, any more than the relatively small number of "backbone" routers are a problem for the Internet. The bitcoin network is evolving in roughly the direction I expected it would (lots of lightweight clients connecting to a smaller number of heavyweight "backbone" nodes).
I have a pretty significant difference of opinion here. I'm sure it sounds paranoid, but I think that there is a more than slight chance that Bitcoin could be attacked by the infrastructure providers.
Before writing this possibility off completely paranoid ravings, remember back to the time when AT&T had no compunction about installing Narus's in spite of it being about as diametrically opposed to our 'principles' as one could get. Yes, it seems like no big deal now, but that only shows how quickly things drift. IIRC, the only telecom who resisted was Verizon and it's CEO became the target of interest to the US justice department (making it one of the very few cases that our justice department has taken an interest in any white-collar individual for about 15 years now.) And, of course, all of the telecoms got blanket immunity for any past wrongdoing, and probably future wrongdoing as well.
Philosophically, I contend that Bitcoin is not much more than an interesting toy if it is not needed to replace other failing monetary solutions. And if it is, it will be under significant attack and will be again not very useful unless it can withstand the attack. I will bet money (by dumping BTC) that a 'a smaller number of heavyweight "backbone" nodes' will be much more susceptible to the kinds of attack which will pose a genuine threat.
So, what to do? Honestly I have concluded that the answer is 'nothing much different'.
Taking some lessons from biology, one can try to kill a starfish by chopping it into 1000 pieces. The net effect is you end up with 1000 starfish. Even more impressive to me, one can smash a sponge through a strainer in an attempt to destroy it but it re-forms itself into a similar sponge on the other side.
While highly non-specific, I believe that things like the above mentioned 'outside the box' concepts and constructions are the kinds of models to look at in designing a robust and durable p2p crypto-currency solution. Certainly Bitcoin has some novel, clever, and powerful concepts to protect it against attack, but it also has some 'tried and true' architectures who's weaknesses I stress about since, as they say, 'a chain is only as strong as it's weakest link.' I think that it is not in the cards to rectify certain of these as a natural evolution of Bitcoin.
I suggest that the prime movers behind Bitcoin development, who I believe share the vision that crypto-currencies are a an empowering and positive thing for humanity, continue on the present course of making the solution as good as they can make it. If/when a similar solution which has as a goal to address some of of the things which I've mentioned as concerns pops up, I do hope that there will be constructive symbiosis that will serve to strengthen everyone's hand.