I am still trying to form an opinion about the block size limit. One of the problems is that most of related threads attempt to discuss this issue in general, and are therefore extremely broad; a flood of arguments on various facests makes it impossible to stay focused on any one of the important facets.
One particular detail that I would like discussed is the question of the economics of transaction fees. This is what got me thinking:
Without a sharp constraint on the maximum blocksize there is currently _no_ rational reason to believe that Bitcoin would be secure at all once the subsidy goes down.
Bitcoin is valuable because of scarcity. One of the important scarcities is the limited supply of coins, another is the limited supply of block-space: Limited blockspace creates a market for transaction fees, the fees fund the mining needed to make the chain robust against hostile reorganization.
It seems to me that this is not quite the case. limited block space
does not create a market for transaction fees. If it did, there would have been no transaction fees paid nor requested in all the years up to now, because we almost never got close to the limit. In other words, the blockspace has practically not been limited (due to relatively low transaction volume), and yet there are fees.
But we aren't paying any fees.. well not really. All we are paying is a fraction of a cent which is a spam protection measure more than anything else, but essentially there are no fees.