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Though, speaking of incentives, this may point to an interesting market failure that lies at the very core of the Bitcoin economy: There's a relatively inflexib

Though, speaking of incentives, this may point to an interesting market failure that lies at the very core of the Bitcoin economy: There's a relatively inflexible cost to processing transactions that's built into the Bitcoin protocol. It's possible for an individual to bring down the cost of processing with better hardware, but in order to bring down the cost of processing transactions by making the underlying process more efficient you need to get miners to go along with it. They've got reasons to oppose doing anything of the sort, though, because they want to keep the cost of entry high for any new competitors. They're essentially an informal cartel of players with a strong incentive to engage in rent-seeking behavior.

CyberDildonics 12y ago
That's an interesting point that definitely has some degree of validity. So far I don't think there has been anything that makes actually processing transactions cheaper (maybe moving to levelDB from berkelyDB would count), but I think that part is essentially trivial anyway. If there were high bandwidth costs for mining that would work in the favor of centralization, but I don't think the cost of processing a transaction or the bandwidth are anywhere near being a bottleneck. Processing transactions seems likely to never be more than trivial but I don't know that much about it.