People running clients are, relaying, storing, and validating block and transactions.  Is that accurate ?

Well it's on the up at the moment, anyone care to call the top before it drops ?

You seem to have problems with the idea that mining might get paid for by any mechanism other than transaction fees. The world is full of things that are "free" but get paid for via other means.

It's not well known that the fallacy is actually "Appeal to Irrelevant Authority".

Surely you don't plan to argue against the proposition that "Satoshi's statements 2-3 years ago are positively correlated with accurate statements about today's effective cryptocurrency protocols"?

hazek I don't understand you here.  I normally agree with the vast majority of what you say.  You're very pro free-market and normally rational.  

But on this one issue you seem to think it needs to be solved by wise men rather than market prices.  Why the lack of faith on this one issue?  No I don't believe there is a tragedy of the commons here.

Currently there's still more than 10% inflation per year because of _mining_. Once this number falls below 1% or so, you might want to call it something else, but at the moment the main income of miners is creating NEW coins, not auditing transactions.

When talking to newbies I describe the network as a collection of independent auditors, who verify all the transactions in return for a small fee. Then later on I might use the word mining and compare it to gold/silver once they roughly understand the concept.

Is this software design by debate?  Am I the design oracle which will only tell you when a design is no good, so you search for the solution by suggesting all the things which are not the solution?

Think a little harder on this. This fails because its costless and obviously in all miners interest to mine fake fees. Fees are paid to this block, not the next block, miners would pay fees to themselves and skew up the average. Your revised proposal is isomorphic to straight up having miners vote on it, which fails for all the previously discussed reasons.

"For every complex problem, there is a solution that is simple, neat, and wrong."

Miners can just put 100 BTC TXN fees in their blocks— they're paid back to the miner after all, it costs them nothing but the risk that someone will reorg the chain to steal their block.  Also why "50"  by fixing 50 in the system you end up creating price distortion.

I had made a off the cuff suggestion which was similar to your motivation there but lacked these risks:  Set the new maximum blocksize to the median of the prior sizes multiplied by half the change in difficulty for increases in difficulty and by the full change for decreases, clamped to no smaller than 1MB. The idea is two fold: it's a cheat-proof way for miners to prove that an increase in size won't break the fee market because they have to work increase computing power to increase it,  and it indirectly measures the progress of silicon: if computers are twice as fast per unit energy, difficulty should be twice as high ... and boring nodes could hand 25% more transactions.  "If miners think that security can be maintained by increasing blocksize, then let them prove it by putting in more hashpower".

I don't like it because it only addresses the security spiral to the bottom problem. It doesn't address concerns about censorship, mining consolidation, enfranchisement of the users, etc. very much. It's also moderately complicated to understand.  It's also not realistic until mining is primarily on modern asics otherwise it will overly measure the change in technology type rather than the returns on mining.

My home was heated for two winters with mining. It is not the most energy efficient form of heating, if you ignore the mining income. But mining income is real and in very cold climates heat-pumps are not as effective. Ground loop for non-air heat sources for them are costly to install, etc.

I use the waste heat from mining as a product as well. Right up until now my mining has at least broken even with power costs AND produced bitcoins that I can spend (on more heat if I wanted). So because I get the heat (100% efficiency electric heating) and I get at least as much money back as I paid on heat, you could easily say that it's over 200% efficient.

Payers have no incentive to ever include any fees, including today, because they are not the ones who actually care about double spending risk. After all, you know you're trustworthy, right?

It's actually the recipient that cares about confirmation. And recipients have many ways to incentivize mining. For example, via network assurance contracts, which I have proposed many times in various other discussions. If you see mining as a public good then assurance contracts are a method that's been both widely theoretically studied and implemented in practice (most obviously kickstarter, other examples are around too).

There is also the rather obvious and oft-overlooked fact that mining generates waste heat, and there are lots of people/places that actually need heat. Because mining hardware is small, portable and scalable, if you're already heating something with electrical resistance it may make sense to use mining ASICs instead and at that point you don't really care about the cost. You still need a full node or a pool to take part but I think that'll be easy to run even at high traffic levels.

Readers are urged to consider that the following two positions of Satoshi are potentially mutually exclusive:

• Fees will support the system, long term
• Block size may be increased in the future

Right now, the block reward subsidy supports the entire system, so it is difficult to draw any conclusions about a fee-supported future -- and yet that is what we are being asked to do.

At the two extremes...

If the block size strategy is too loose (too big), there is no incentive to curb spam, there are not enough fees.

If the block size strategy is too tight (too small), fees are very high, in-blockchain traffic is discouraged, possibly users are discouraged away from bitcoin.

The open question is...
how to pick the best number?
or, how to enable a market to pick the best number?
or, how to pick an algorithm that picks the best number?

The fee/block-size balance is a crucial balance that must be maintained for the health of the system.  There is little evidence that Satoshi put much thought into this, probably supposing that the market would figure out the answer.