The original blocksize was 32mb and the 1mb was temporary anti-spam measure.
Not correct. No version of bitcoin has been able to handle blocks larger than 1 MB. When the 1 MB limit was set, bitcoin would still choke on 1 MB blocks.
Miners producing much smaller blocks would win any race, because nodes receiving the 1 MB block would crash. Large blocks wouldn't propagate to other nodes.
Researchers have figured out that blocks larger than about 4 MB would be unsafe. This is why segwit is capped at 4 MB. If it was a way to make bitcoin work just as well with even larger blocks, it would probably have been implemented in segwit. Fortunately the parameters have been chosen by scientists, not users.
The stubbornness and refusal to raise the limit created a side effect of bad business policy
The limit is a hard blockchain rule, not a business policy. Splitting bitcoin in two would not only be a bad technical decision, it would be bad for businesses as well. Especially small businesses like mine.
I do wish people on here studied accountancy like myself, then people would have a better understanding of Bitcoin.
LOL!
Btw, the economic properties of the block size limit become obvious when the txfee rewards are much larger than the block reward, which is going to happen faster with larger blocks. It will no longer be profitable to build on a new block for a miner. Instead he will try to steal the fees from the previous block by mining a new block at the same height, at least until the fees from waiting transactions in the mempool are higher than in the last mined block. Thereby leading to steadily increasing txfees.
This is what miners want, not necessarily what users want.Crash or orphan? The race to win a POW subsidy is somewhat a bizarre race. Miner A solves POW. Miner B solves POW 1 second later. Miner A filling up a block, whilst miner B just send an empty block and wins the race. Should the race be - Miner A solves a block and broadcast it to all miner nodes. Miners' nodes acknowledge it and broadcast it. A count is made that miner A is the winner and miner A fills the block and propagate it, without worrying another miner crossing the line first with an empty block. If miner B solves a POW 1 second later and broadcast it, a count is made that miner A is the winner by majority vote. If vote is a tie then winner based on block propagation.