On Thu, Dec 17, 2015 at 7:44 PM, Peter Todd <pete@petertodd.org> wrote:

> If Bitcoin remains decentralized, miners have veto power over any
> blocksize increases. You can always soft-fork in a blocksize reduction
> in a decentralized blockchain that actually works.
>

The actual users of the system have significant power, if they (could)
choose to use it.  There are "chicken" effects though.  They can impose
costs on the other participants but using those options harms themselves.
If the cost of inaction is greater than the costs of action, then the
chicken effects go away.

In the extreme, they could move away from decentralisation and the concept
of miners and have a centralised checkpointing system.  This would be a
bankrupting cost to miners but at the cost to the users of the
decentralised nature of the system.

At a lower extreme, they could change the mining hash function.  This would
devalue all of the miner's investments.  A whole new program of ASIC
investments would have to happen and the new miners would be significantly
different.  It would also establish that merchants and users are not to be
ignored.  On the other hand, bankrupting miners would make it harder to
convince new miners to make the actual investments in ASICs required to
establish security.

As a gesture, if merchants and exchanges wanted to get their "seat" at the
table, they could create a representative group that insists on a trivial
soft fork.  For example, they could say that they will not accept any block
from block N to block N + 5000 that doesn't have a specific bit set in the
version.

Miners have an advantage where they can say that they have the majority of
the hashing power.  As part of the public action problem that merchants
face, there is no equivalent metric.