Quote from: misterbigg on March 02, 2013, 03:56:30 PM

Quote from: Michael_S on March 02, 2013, 12:58:31 AM

So does this means that due to today's 1 MB limit per 10 min (i.e. per block), if the number of transactions get so large that more than 1 MB of transaction data is generated every 10 min, then some transactions will never ever make it into the blockchain, if their transaction fees are too low?

You're thinking along the right lines. My prediction:

Quote from: misterbigg on February 20, 2013, 08:09:15 PM

Quote from: Gavin Andresen on February 20, 2013, 07:38:16 PM

we should see what happens as we run into the soft blocksize limits...what do you predict will happen?

In this order:

1. Most blocks are at or near the 250 kilobyte soft limit.
2. The memory pool of transactions grows due to insufficient space in blocks.
3. Users notice trend of transactions taking longer to confirm, or not confirming at all.
4. Fees increase as users pay more to improve confirmation times.
5. Miners (or mining pools) modify code to select transactions with the highest fees per kilobyte to fit into blocks. They remote the 250 kilobyte soft limit. Some miners disallow free transactions entirely.
6. Transactions clear much more quickly now, but fees decrease.
7. Blocks increase in size until they are at or near the one megabyte hard limit.
8. Fees start increasing. Free transactions rarely confirm at all now.
9. Small transactions are eliminated since they are not economically feasible. SatoshiDice increases betting minimums along with fees. The volume of SatoshiDice transactions decrease.
10. Users at the margins of transaction profitability with respect to fees are pushed off the network.
11. Many people, most non-technical, clamor for the block size limit to be lifted.
12. Fees reach an equilibrium where they remain stable.
13. Spurred by the profitability of Bitcoin transactions, alternate chains appear to capture the users that Bitcoin lost.
14. Pleased with their profitability, miners refuse to accept any hard fork to block size.

I believe your guess is reasonable until point 10. After that, you're failing to understand the situation isn't stable at all, given all the competing interests, hence your 14th point in particular cannot happen. The situation will resolve itself in the interests of the majority by the limit being increased. The miners do not have the final say.