If we perpetually increase capacity ahead of demand, fees will never rise. Transactions will always be free or nearly free for users. This will not end well in a future where block subsidy ends and fees alone must support the security of the network (by incentivizing miners). If we did this, we are basically depending on mass adoption and skyrocketing price being guaranteed. That's probably not a good engineering decision.
The demand is there already.
By not increasing capacity, mass adoption becomes impossible. It's already not possible for just 1 million people to make a few transactions per day, let alone much more people.
I don't think you understand what I said. The demand
should outweigh capacity if fees are to rise. And fees must rise significantly if the chain is to remain secure many years from now. And regarding capacity....firstly, Segwit, Schnorr and other optimizations + LN will drastically increase capacity. Secondly, it's not clear that fees are discouraging adoption at all---data, please? For those that view BTC as digital gold, 10 or 20 cent fees are not discouraging at all.
If we perpetually increase capacity ahead of demand, fees will never rise. Transactions will always be free or nearly free for users. This will not end well in a future where block subsidy ends and fees alone must support the security of the network (by incentivizing miners). If we did this, we are basically depending on mass adoption and skyrocketing price being guaranteed. That's probably not a good engineering decision.
Right now, transaction fee represents less than 2% of the miner's income. The remainder comes from the block reward. This percentage is going to increase in the future, but no by much. By 2030 or 2035, the tx fee may cross the 10% mark. If we increase the tx fee, that will do more harm than good. The usage will go down, and there will not be any significant increase in the miner's revenue.
The remainder comes from the block subsidy, which in a few years will be 6.5 BTC per block, and a few years after that, 3.125 BTC per block. Why would you assume that transactions won't make up for the loss in subsidy? Why, that was the whole premise of the system---that fees would eventually replace subsidy. Bitcoin has a finite supply. You say fees will never amount to subsidy; well, rationally, that suggests that in the future, the Bitcoin network will be significantly less secure than now. Perhaps we will see such drops in hash rates that mining tech from previous generations could be used to attack the network and cause block reorgs.