Discrimination in mining, and Mike being early to realize the 'utility.' Sorry to have lost you...
Do you understand that the discrimination is only possible with a situation of a limited size?
If there is a space for 10 tx on a block, and the block is always full, the entity that makes the block (the pool/miner), then can chose to give a preference to some tx.
So, it can ask for a fee paid to him directly.
If the block now has the space for 100 tx (example), the miner/pool can still try to ask for a fee, but no one is going to pay it, because there is a very high probability that another miner will incluse all the fees directly.
This simple logic doesn't need a genius evil mind. You should see that mike was already clever on giving this warning a way before this has happened.
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What are you even talking about? Block size has nothing to do with the ability to discriminate transactions. Discrimination has to do with whether there exist the means to engineer effective discrimination (by limiting the set of potential miners and/or filtering transactions which reach them) and whether there are pressures to do so. e.g., Political, economic, social, etc.
Block size is mainly related in some degree insofar as it impacts the makeup of entities who can mine. For instance, large block sizes could increase the technical hurdles to a point that only larger and (at some point) politically favored operators are viable. Economics plays a similar role due to economies of scale and the threshold at which monetizing alternate revenue streams (e.g., intelligence) is practical.
I will again point out that tapping into the intelligence that comes from monitoring an exchange currency is of very high potential value. Much more so than, say, reading people's e-mails or cloud storage or watching their web searches. Imagine the value a wallet service could have if, when a user tried to make a transaction, the service could say '
Hey, one of our partners can sell you the same thing at a 5% discount.' The only miners who would be economically viable would be those who are large enough to attract a good set of partners. I would be very surprised not to see 'cash back' for using {internet monster corp here}-wallet app. And, of course, these massive corporations would mine themselves or any miners they contract with would dance to the tune they play.
The best that could be hoped for in the above world would be that there would be perhaps 4 or 6 choices of what wallet app to use. I suspect that is what Hearn was thinking when he suggested (correctly) that Bitcoin could work fine if there were that small integer number of copies of the Bitcoin blockchain worldwide. Anyway this is not the type of Bitcoin I care very much about...after I drain down the profits it has made me...