the main problem with not increasing the blocksize. is that the limited transactions allowed end up covering all the mining costs
EG if it cost $200k to mine a block. and there are only allowed 2500 transactions.
then each transaction ends up costing $80
user would not want to pay $80 to be able to lock an asset.. release an asset for/from another network
after all. if paypal offered payments for micropennies but said it will charge $80 per deposit and $80 per withdrawal.
people will just use vinmo
the silly economic politics is
"reduce onchain utility 'coz average joe needs to store blockchain''
which is countered by
"offer custodial channels offchain 'coz average joe wont use fullnodes 24/7 for their once a year unlock'"
The most bizarre step in the long, slow, drawn out attempts to scale bitcoin is segwit.
Segwit itself increased the limit on the size of a block by roughly 4 times, which, oddly enough, is exactly that ... a block size increase ...
the cludgy math to increase the data bloat.. did not result in an increase the transaction capacity. thus its "we increased the block size" missed the whole point of the real reason why the community wanted a blocksize increase
its like a woman asking for bigger pants so that when she gets pregnant she has room to comfortably incubate kids..
the husband gave her bigger pants but got a vasectomy to refuse to give her the kids she actually wants the pants for. oh and now he just wants to make her fat to fit into the pants