Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.
The minimum transaction size is 166 bytes.
This gives us maximum 25266 transactions/block.
The current block reward is 6.25 https://blockchair.com/tools/halving-countdown
This is worth about $72,000 USD https://duckduckgo.com/?q=6.250+BTC+to+usd&t=canonical&ia=cu...
This means that, to match current security without block rewards, transaction fees would need to rise by at least $2.84/transaction.
The average block size right now is 1.2 MB (the 0.2 MB because of SegWit). Assuming SegWit adoption increases to 100%, we get 1.6 MB.
The average fee on a transaction would need to rise $7.47 to match the post-halving's new, lower, security budget.
The average value of a transaction would need to double to make an average transaction fee of $14 (the current average fee of $6.50 + an increase of $7.50 to cover the loss of the security subsidy) economical.
But the doubling of value flows would make the current $security budget less adequate, so even less suitable for reserve currency usage.
And if the price increases, as Bitcoin investors hope it will, value flows would increase further, requiring an even larger security budget and average transaction fee.
At some point's further utilization and appreciation will be arrested by the diseconomies of scale caused by rising fees.
My calculation was looking at a lower bound for needed transaction cost.
Needing to roughly double the status quo transaction fees to make up for lack of the block reward in order to provide equivalent security, doesn't seem ridiculous to me at all. And this is the worst case scenario (i.e. the reward will go from 6.25 to 0 slowly, but it can't go negative).
I don't see any reasonable case for the prediction that Bitcoin's average transaction fee will reach those extreme highs.
>Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.
I didn't say "remove". I said "raise".
Why not? At scale with current block sizes Bitcoin would probably be settling payments of institutional-level transfers, state money management, and 2nd-layer networks like Lightning. Individual transaction fees would be high but they would represent aggregated fees for millions of off-blockchain transactions.
The fees wouldn't likely be paid by everyday users at that point.
Visa does something like $11 trillion in volume per year. Why does anybody use that if visa takes 1-2%?
1% of 11 trillion is 110 billion. With that amount of fee revenue you'd be able to secure the Bitcoin network 12,000 times over.
So Bitcoin's security is able to grow by 1,000x and still cut prices relative to current popular providers by 12x.
That's cheap, not expensive, and that will lead to demand over time.
In contrast to Visa, which can process 3,000 transactions per second, Bitcoin can only process 3 per second.
Limited, even during peak demand, to 1/1000ths of Visa's average throughput, and 1/10,000ths of Visa's peak usage throughput, there is also no way Bitcoin can match Visa's $11 trillion volume.
2nd layers for Bitcoin can scale to many thousands of transactions per second.