I recently heard Dan Kaminsky mention in his recent article: http://www.wired.com/opinion/2013/05/lets-cut-through-the-bitcoin-hype/ that a mining algorithm friendly to general purpose hardware is superior because it is more inclusive to "the masses", as it wouldn't require specialized hardware to participate, and thus mining would be that much more decentralized.  I doubt this is much of an advantage though, as most people would have to buy high end general purpose hardware specifically to mine anyway in order to remain competitive and profitable, and the barrier to entry for running specialized hardware (ASICs) will soon be just as low.

Furthermore, having a mining algorithm require specialized hardware appears to be a great strength.  E.g. suppose an attacker amasses >50% of total hashing power.  Then the network could (as a last resort) swap out the mining algorithm, and render all of his equipment useless for attacking the new system and for resale. With general purpose equipment, he could keep attacking the new mining algorithm, or resell his equipment to recoup some of his costs.  While the honest miners would lose all of their investment (this should be considered an inherent risk of being in the mining business), they still collectively lose less than the attacker.  As long as there remains sufficient profit motive to mine - i.e. BTC remains valuable - then ASICs for the new algorithm should be quickly forthcoming to the market while CPUs/GPUs pick up the slack, and any attacker wishing to continue this attack will quickly go bankrupt as he's up against the capital stock of the whole world.

The damage the attacker does - e.g. the drop in BTC value - can be mitigated if such a response is understood by all to always be potentially necessary, and perfectly within the realm of manageability (it seems to me to be, unless I'm missing something).  "Fire drills" might even be done in advance, which would undoubtedly inspire confidence.

tldr; If the mining network relies on specialized rather than generalized hardware, then there is a "nuclear option" available to deal with and deter >50% attacks.

Casual and ASIC don't go together. Not even if governments don't interfere, let alone if they do.

ASICs are faster than CPU's at SHA-256. They're not necessarily faster at scrypt. I'm actually doing a lot of work in this space, stay tuned.

Picking a hard algorithm like scrypt doesn't mean that there won't ever be an ASIC for it, it just means that developing that ASIC will be harder, which means that different people will be doing it.

I recently heard Dan Kaminsky mention in his recent article: http://www.wired.com/opinion/2013/05/lets-cut-through-the-bitcoin-hype/ that a mining algorithm friendly to general purpose hardware is superior because it is more inclusive to "the masses", as it wouldn't require specialized hardware to participate, and thus mining would be that much more decentralized.

I doubt this is much of an advantage though, as most people would have to buy high end general purpose hardware specifically to mine anyway in order to remain competitive and profitable, and the barrier to entry for running specialized hardware (ASICs) will soon be just as low.

Furthermore, having a mining algorithm require specialized hardware appears to be a great strength.  E.g. suppose an attacker amasses >50% of total hashing power.  Then the network could (as a last resort) swap out the mining algorithm, and render all of his equipment useless for attacking the new system and for resale. With general purpose equipment, he could keep attacking the new mining algorithm, or resell his equipment to recoup some of his costs.

While the honest miners would lose all of their investment (this should be considered an inherent risk of being in the mining business), they still collectively lose less than the attacker.

Why don't we develop a coin where the proof of work is general purpose problem solver ?