Just posted this on /r/bitcoin..I'll await my ban.
Yes of course the average txn fee (within the constraints of a fee market and a limited blocksize).
But if the block is larger then the average txn fee could be lower and allow more capacity in the network to the benefit of all. The network capacity could be doubled by changing a single number on a single line of code with no ill effects. Noone is saying that bitcoin can scale up 1000x from here today. It doesn't have to, but instead simply keep pace with transaction demand.
There is a fundamental disagreement between keeping the bitcoin chain for 1) a small number of on chain transactions which are expensive or 2) increasing the block size and encouraging huge numbers of transactions which pay much less but may cause eventual centralisation. Who really believes centralisation will happen if the blocksize raises to 2mb or 5mb?
Over the longer term it is in miners interest to have as many users as possible on chain as the block reward subsidy will exponentially decay in the coming years. Ergo, miners will band together and choose a solution in conjunction with payment processors, wallet companies, exchanges etc which encourages as much activity on chain as possible. The current ideology driving the position on
/r/bitcoin and in the Core camp is in direct opposition to what is in miners self interest.
Remember 'Core' is simply a tweaked fully functioning reference client created by Satoshi which has been deliberately crippled by allowing an anti spam feature to begin to throttle blockwidth from meeting network demand. It doesn't take a genius to see that when we are regularly filling blocks (no matter the cause) that it is time to increase the limit whilst other solutions mature.
It isn't a great stretch with the creation of XT to see the jig is up and soon another tweaked reference client will emerge with industry support and take network dominance. Hopefully many such implementations emerge.
There is almost sycophantic eulogising on here about bitcoin 'experts' and Core developers. The reality is that they have simply bug fixed and improved upon existing functional code created in 2009 by Satoshi, nothing more. There is nothing in of itself special about Core. If the ecosystem want bitcoin to scale it is a simple matter of changing version of bitcoin client software.
This is what Theymos fears. As soon as other clients become popular amongst miners and nodes then the ability to set rules and change (or more importantly limit) the protocol will be lost from the Core maintainers. Shouldn't be long now.
