Scalability as in block size limit.
Transaction fees.
The other issues are non issues in relation to the above. (I'd feel progress is happening if we just altered 2 lines of code over the next 3 years while we debated the issue)
http://www.freebanking.org/2014/11/18/bitcoin-will-bite-the-dust/ read this.Where Kevin Dowd's analysis falls short is he doesn't account for the economics in the block halving. The block halving wrestles power away from miners.
I've outlined how miners in cooperation with the proposed change to the protocol can avoid the declining revenue in the halving.
For every cent miners earn mining Bitcoin on a SideChain they insulate themselves from the disruption in the inevitable 50% revenue drop, and for every bit of insulation we move closer to Kevin Dowd's inevitable Bitcoin prediction.
let me see if I understand you correctly: you're saying that introducing spvp at the protocol level will block the inevitable erosion of miners power, am I correct?
In any case I've to thank you b/c I've never thought of block halving as a way to reduce miners influence on the btc env.
It makes sense and if we take into consideration that after a certain threshold concentration of mining power is pernicious
to the system we should appreciate the satoshi's genius even more.
The usual way of "reading" block halving is a method to control inflation in the system, the one you just make me
discovered is less evident but not less important.
One last thing about the link you share above. I've just gave it a quick glance but I'm not sure that this part 100% true:
However, the mining industry is characterized by large economies of scale. In fact, these economies of scale are so large that the industry is a natural monopoly.
Why, let say, discus fish rather than ghash.io should became a monopoly if being such a thing will mean getting a
btc/fiat ratio equal to 0?
re 1, it would be possible where that wasn't possible before, depending on the incentives and the economic energy invested it could happen fast or take a 100 years.
re Block halving, and inflation the step function feeds into other loops too it perseveres value, it ramps up early investment and stimulates innovation in efficiency. (every time i learn something new i wonder if Satoshi actually knew it or it happened to be like that.)
re 2, Kevin Dowd is a Bitcoin pessimist, but what he is saying is mining will tend to centralize and then a carrells will form and ultimately it will become a monopoly.
This is a view many Bitcoiners hold so it has merit.
Where he is wrong is in understanding mining, but what we see happening and what is expected to happen dont support his prediction.
we have price epochs, (some great Bitcoine mind here on bitcointalk came up with a energy theory that governs the price between each halving I can't find the reference and I'm not even sure if he called it an epochs I just built on it)
the situation is dynamic and mining centralization is expected we've seen this with pool mining and the resulting power shifts as different pool dominate. but block halving will discourages cooperation as miners scramble to squeeze out any profit they can, some may go bankrupt and some will survive, there are many feedback loops, this also makes the network more efficient and encourages value growth. there is also wild price volatility which is key to regulating miners investments in hardware, some will get lucky some won't, it also creates opportunity for new competition. ultimately this is all regulated by the available energy as the system grows, the extent of the analysis stops at energy infrastructure as is often planed 10 years in advance and the volatility and reward dropping prevents miners form influencing those decisions.
funny story on infrastructure limitations, a friend unrelated to Bitcoin earlier this year was having problems with a production line, in the city where they were located in China, he told me there were no PCB assembly plants willing to do there job, as they were all busy doing Bitcoin ASICs, so even production capacity is a limitation in a boom.
