Bitcoin transactions seem to have cheap fees, because everybody forgets that the block rewards currently act as subsidy to keep them low. On average, a transaction costs between $30 and $40 if you do take them in account, and thats way higher than most banks charge, and way too high for micro-transactions.

Now suppose that Bitcoin had no block rewards right now (like it will in the future), there can only be two possible outcomes: either that the hash-rate would drop to much lower levels, and the fees would stay the same. Or that the fees would rise to about $40 per transaction, and that the hash-rate would stay the same.

My gut feeling would say that even with a massive drop of hashrate, Bitcoin would still be secure, because the current hashrate seems like overkill to me. But in my previous topic (Alternative initial distribution of coins) various Bitcoin-veterans (like DeathAndTaxes) stated exactly the opposite: that Bitcoin wouldnt be able to survive if miners received just the fees and no additional rewards. So the expert opinion seems to be that the network would be unusable.

The other alternative (higher fees) also seem to make the network unusable, except for high-value transactions, which are a minority.

So if both are true, is it safe to say that block rewards are just a subsidy for Bitcoin's ridiculously high transaction costs?