...when Bitcoin can't cope and grinds to a halt.
There is no grinding to a halt. The worse case scenario of not resolving this in a strategic way, or not forking for a larger max block size is that Bitcoin will continue to do what it already does better than anything else. It does not "grind to a halt". If your transaction is urgent, you pay a fee.
The current proposal from Gavin also guarantees that there will be more hard forks. The proposal is a guess at what might be needed, it does not measure the block chain in any way to determine how to set the right block size.
Sell your fear elsewhere.
Exactly. Gavin's GigabloatCoin is being sold to us based on the fear that plain old Bitcoin will explode if people actually start using it.
No such thing will happen so long as we keep the system antifragile, which includes maintaining a defensible/diverse/diffuse/resilient network.
Under a full load, blockchain space/priority will simply become priced at market rates instead of being subsidized like in the past.
It's just like Uber. If too many people want to use the service, Surge Pricing kicks in and cheapskates can wait around for a taxi or bus instead.
Yes, but in the case of Uber there is an option for scalability. If the prices are in surge for a longer period (meaning there is increasing demand), more people will sign up to become drivers because it's profitable.
Bitcoin at 1MB hard cap has no such option. I agree that the priority based on fees is a good thing for the occasional peak in the number of transactions. But not if the system is at 100% percent all the time. All we can have is about 3-4x as many transactions than what we have today. And that's it.
How would you solve the problem? Or do you think this is OK? Bitcoin stays at 7 TPS forever. And only people willing to pay the fees can use it.
In this case you have answered the question of why we need altcoins
sidechains?