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I'm working on a follow-up blog post that talks about economics of the block size, but want to get it reviewed by some real economists to make sure my thinking is reasonably correct. But I'm curious: why do you think an extremely large block size will mess up the economics of mining? What do you think would happen?
RE: geometric growth cannot go on forever: true, but Moore's law has been going steady for 40 years now. The most pessimistic prediction I could find said it would last at least another 10-20 years; the most optimistic, 600 years.
I'd be happy with "increase block size 40% per year (double every two years) for 20 years, then stop."
Because if Bitcoin is going gangbusters 15 years from now, and CPU and bandwidth growth is still going strong, then either the "X%" or the "then stop date" can be changed to continue growing.
I did some research, and the average "good" broadband Internet connection in the US is 10Mbps speed. But ISPs are putting caps on home users' total bandwidth usage per month, typically 250 or 300GB/month. If I recall correctly, 300GB per month was the limit for my ISP in Australia, too.
Do the math, and 40% of a 250GB connection works out to 21MB dedicated to Bitcoin every ten minutes. Leave a generous megabyte for overhead, that would work out to a starting point of maximum-size-20MB blocks.
(somebody check my math, I'm really good at dropping zeroes)