One of my favourite saying is this one; Standards are fantastic, just a shame there are so many overlapping ones.

Companies make standards to add value to their products. When Sony released their memory stick(r) 1998 it was quite a good contender. Yet at the same time SD Cards and CF cards were on the market. Too many standards to essentially do the same thing.
For various reasons we really only have the CF cards left. Which is the de-facto standard now which you'll find in phones and plenty of other places.

This means that the market decides. The thing that is cheaper to produce or has less restrictions or simply was first wins until something better comes by. There is no grand designer, there really isn't a voting booth or elections. It is the ruthless reality of business and the thing with the biggest amount of users wins.

When you apply this to currency this concept gets accelerated. Whereas with a memory card you can have multiple competing ones at the same time, which is just a burden, in a currency having two competing standards at the same time is just not realistic. Ask anyone that lived in Europe in 2001 about the switch-over to the Euro. People changed as fast as they humanly could because using two types just doesn't work.

So it is with Bitcon and Brian Armstrong explains this very concisely but correctly.

This blog, on the other hand, completely misses the human factor in how currencies and how competing ideas work, and have worked for thousands of years. It seems to try to describe the world as he wants it to work instead of how history show it actually works.

as long as users agree to use a currency with a specific protocol, this currency exists and is usable and valuable. If users agree to collectively switch to a different protocol, so be it.

This starts well, I fully agree to this part.

But a core part of Bitcoin’s vision is that users can also agree to disagree. If a group of users wants to use a specific protocol, they have the right to do so, regardless of what anyone else says. Nobody can force a user to adopt a specific protocol. Bitcoin is not, and never has been, a democracy, governed by majority vote. It is something much better, a plurality – the ability of everyone to choose their own path.

And this just shows a lack of understanding of money and of people. Which is really the same thing as money is really about people.

What he's trying to say is that its fine if I use little pieces of paper with numbers on it as money. I'm fully allowed to do that. Naturally, this is quite useless because money gets its value from a huge group of people all agreeing it has value.

So how does a huge group of people go about deciding that something has value? Look at the history of the price of Bitcoin and you have a pretty good idea. At first the price was so low, it was not possible to express in dollars. After quite some time it was worth so much you could actually buy a pizza for it and now after years one bitcoin could buy quite a lot of pizzas. In short, the worth grows slowly over time. When more people start believing that it has value, its value rises.

I'd say that this is the best expression of democracy you can have; the more people agree something has value the more valuable it is. Its not really voting like you do for a president of parliament, but it really is the same concept.

Now if a small group thinks a change should happen, like the 2MB blocks, the value of their idea is only as great as the amount of people believing it. As explained above. So they ask around and try to get others on board. When enough people believe that the way forward is to actually make this change, the most valuable configuration is the one that the biggest group of people believe in. And people will start "voting" with their wallet.

So, exactly because Bitcoin has risen in price because more and more people started to believe it has value, similarly the value will rise when modifications are made that make a larger group have faith in it too. And to accomplish this, they vote with their money.

Miners just have to figure follow that majority to maximize profits. Very similar to what any other company does. Predict the market to get best return on investment.