On Thu, May 7, 2015 at 3:31 PM, Alan Reiner <etotheipi@gmail.com> wrote:
(1) Blocks are essentially nearing "full" now.  And by "full" he means that the reliability of the network (from the average user perspective) is about to be impacted in a very negative way

Er, to be economically precise, "full" just means fees are no longer zero.  Bitcoin behaves as it always has.  It is no longer basically free to dump spam into the blockchain, as it is today.

In the short term, blocks are bursty, with some on 1 minute intervals, some with 60 minute intervals.  This does not change with larger blocks.

 
(2) Leveraging fee pressure at 1MB to solve the problem is actually really a bad idea.  It's really bad while Bitcoin is still growing, and relying on fee pressure at 1 MB severely impacts attractiveness and adoption potential of Bitcoin (due to high fees and unreliability).  But more importantly, it ignores the fact that for a 7 tps is pathetic for a global transaction system.  It is a couple orders of magnitude too low for any meaningful commercial activity to occur.  If we continue with a cap of 7 tps forever, Bitcoin will fail.  Or at best, it will fail to be useful for the vast majority of the world (which probably leads to failure).  We shouldn't be talking about fee pressure until we hit 700 tps, which is probably still too low. 
 [...]

1) Agree that 7 tps is too low

2) Where do you want to go?  Should bitcoin scale up to handle all the world's coffees? 

This is hugely unrealistic.  700 tps is 100MB blocks, 14.4 GB/day -- just for a single feed.  If you include relaying to multiple nodes, plus serving 500 million SPV clients en grosse, who has the capacity to run such a node?  By the time we get to fee pressure, in your scenario, our network node count is tiny and highly centralized.

3) In RE "fee pressure" -- Do you see the moral hazard to a software-run system?  It is an intentional, human decision to flood the market with supply, thereby altering the economics, forcing fees to remain low in the hopes of achieving adoption.  I'm pro-bitcoin and obviously want to see bitcoin adoption - but I don't want to sacrifice every decentralized principle and become a central banker in order to get there.

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Jeff Garzik
Bitcoin core developer and open source evangelist
BitPay, Inc.      https://bitpay.com/