Join Date: Feb 2009
Location: Dorset, SW England, United Kingdom
Bikes: Heavily modded Cannondale Hooligan 1 (2009) and an upgraded Raleigh Max Zero-G
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Tyre wear should not be an issue, but it does pay to have tyre sidewalls that are designed for use with a bottle dynamo - otherwise excess pressure may be required to reduce slippage and increases drag.
It has been a long time since I have used a bottle dynamo, and TBH since I have used a hub dynamo I will NEVER go back to bottle.
I goy a Shimano Alfine dyno-hub for ~£50 GBP, new spokes for ~£30 GBP and fitted for ~£20 GBP, so a grand total of about £100 GBP. You can pick up a nexus dyno hub for ~£25 GBP, normal spokes (I went for very specific spokes) will probably set you back ~£15 GBP - which drops it down to about £60 GBP - of course, you can always look for a prebuilt wheel to give you the option of no dynamo as well if you prefer.
Don't get me wrong, bottle dyno's are OK, I would even go so far as to say good - but hub dyno's are much better.
Just my $0.02