On 5 August 2015 at 10:57, Adam Back <adam@cypherspace.org> wrote:

You may find the flexcap idea summarised in outline by Greg Maxwell
and Mark Friedenbach a month or so back interesting in showing that
one can achieve such effects without handing over a free vote to
miners and hence avoid many (though probably not all) of the
side-effects inherent in giving miners control.

The market I am thinking of would be open to all, not just miners. But miners would probably be best placed to profit from such a market, as it is their business to know about the revenue/costs tradeoff.

About side-effects, I think we can make argument that there are limits
because other than in an extremis sense, miners are not necessarily in
alignment with security, nor maximising user utility and value
delivered.

If the block size was increasing at every settlement date (the dates on which, every 3 months say, the block size would be adjusted to the level indicated by the market) and users were getting concerned about centralization, the natural tendency would be for:

a) The block size prediction market would tend to go back down.

b) BTC/USD would tend to go down, reducing miner profit and indicating to them that the block size is too high.

c) Transaction rate would decrease as some users stop using Bitcoin, also decreasing miner profit.