Piling every proof-of-work quorum system in the world into one dataset doesn't scale.
Bitcoin and BitDNS can be used separately. Users shouldn't have to download all of both to use one or the other. BitDNS users may not want to download everything the next several unrelated networks decide to pile in either.
The networks need to have separate fates. BitDNS users might be completely liberal about adding any large data features since relatively few domain registrars are needed, while Bitcoin users might get increasingly tyrannical about limiting the size of the chain so it's easy for lots of users and small devices.
Apparently billyjoeallen is a true visionary, unlike cripplecoiner Satoshi who put there the 1MB limit and only wanted Bitcoin's fate to be "restricted" into a much lesser role instead of wanting to include every possible dataset that can be "blockchained", into BTC's blockchain.
As an inventor, Satoshi would likely get enormous credit for creating something that could be used for 100 or 1000 stuff simultaneously instead of 1, 5 or 10. Yet he was quite open and honest about whether that would actually scale.
Satoshi showed the way: The invention of the blockchain could be used with parallel blockchains for different data sets. It was not necessary to put every single data set into the same blockchain.
But billyjoeallen knows better...
It is not clear what Satoshi thought of bitcoin in Oct/2010. At that time, the project was already giving signs of drifting away from the goal that he stated in 2009. (Who knows why he left the scene abruptly, shortly therafter; but one theory is that he was smart enough to see that the protocol would fail to achieve that goal, and lost interest in the project.)
There is no sign that he ever intended bitcoin to be a replacement to the traditional payment system (cash, credit cards, bank wires, etc.), which, as he admits in
the whitepaper works well enough for most transactions.
Surely he was sensible enough to realize that, while bitcoin
could scale to VISA size in the distant future, it could not compete with it in all the comfort features that the traditional systems offer but bitcoin lacks.
So, he did not intend bitcoin to be used for buying coffee or groceries, sure. But he did not intend it to be used for buying cars, houses, or space shuttles, either. Or for large-volume settlements between banks or big corporations either. Or to be a general-purpose shared database for things like BitDNS.
Bitcoin was designed to be
an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party.
It was meant to render a service, not to make anyone rich. If it had an adoption goal, it was only to be available whenever two parties needed to make an internet payment, and a trusted intermediary was not available or desirable -- and that need was strong enough to overcome the limitations and inconveniences of the system. For normal law-abiding people, such situations should be few and far between. Even today, the system would be quite capable of handling such traffic.
If we assume that he was still clinging to his original vision, that message quoted by @AlexGR does not mean what it may sound today. First, in his vision, there should be only two kinds of players: the miners (that he called "nodes"), and the simple clients that did only limited validation, followed the majority chain, and trusted the miners for the full validation. (There was no provision in the protocol for the non-mining relay nodes that are now claimed to be the Guardians of the CryptoRevolution, which in fact are the sort of middlemen that bitcoin was supposed to get rid of.)
Moreover, Satoshi did expect that, as the volume increased, mining would be limited to entities with a stake on the network's wellbeing. But he obviously assumed and hoped that there would be thousands of independent miners with comparable hashpower, scattered all over the world. That assumption was needed to exclude the risk of a "majority cartel" -- a subset of the miners holding a majority of the hashpower, who conspired or were forced to act against their immediate financial interest. Such a cartel could completely block the network, and therefore could blackmail the other miners and clients into accepting arbitrary changes to the protocol. Majority voting weighted by proof-of-work is essential for the protocol to work at all; therefore, if such a cartel forms, there is no way to protect the protocol from its abuses.
From
the whitepaper:
New transaction broadcasts do not necessarily need to reach all nodes. As long as they reach
many nodes, they will get into a block before long. Block broadcasts are also tolerant of dropped
messages.
Note that he was not even assuming that the transctions would propagate through all miners.
Quoting
the first version of the bitcoin.org website:
When [ the block reward ] runs out, the system can support transaction fees if needed. It's based on open market competition, and there will probably always be nodes willing to process transactions for free.
But it is clear that he never intended for some clique of developers to put a limit on the size of blocks to force all cients to compete for block space by raising their fees. That would not be an "open market", but a centrally-planned market reminiscent of the Soviet economy (only dumber). He clearly intended that miners would operate as any business in a free market. Namely, each miner figures out his optimum fee (the fee that maximizes his net revenue), and then processes all the transactions that he gets that pay that fee -- expanding his bandwidth and servers as needed.
To be sure, that part of his plan seems rather fuzzy. Why would miners volunteer to process an arbitrary amount of anonymous transactions for free? How would clients get to know the cutoff fees of each miner? How would the miners find their optimum fee (that depends on other miners's decisions? And so on. I don't know whether he ever clarified that part of the plan.
Although Satoshi comes out as a competent software engineer and a fairly sensible person overall, his knowledge of economics was clearly limited, with the misconceptions that one would expect from a computer scientist (like myself, I must confess). See for example his belief that a good currency should be inflation-free, his decision to reduce the reward by abrupt halvings intead of a gradual decay, and his failure to foresee the speculative bubbles and the inevitable concentration of mining.
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