Actually blocksize is almost certainly not a real issue, here's my take on it. Evidence supporting this is quite solid. Alot of people were suspicious as to what the real motive of XT was since they knew blocksize isnt a dire situation.
Funny that no one seems curious about what the motives of Blockstream may be...
1) Bitcoin block rewards will eventually become infinitesimal, at that point transaction fees will be the only rewards miners get. Right now transaction fees are around 0.1-0.5 BTC per block, which is nowhere near enough funding to secure the network by itself. We need transaction fees to go up, and the only thing that will force them up is the blocksize limit. Increasing block size might cause fundamental damage to Bitcoin due to this.
You own a bus company and you are losing money because you have 1 bus, only enough customers to fill 60% of its capacity on average, and 20 employees with fat salaries in an expensive rented office. You are charging 1 $ of fare, but you are spending 200 $ for each passenger that your carry. However passengers are increasing and by next year you know that you will have to leave passengers waiting for hours at peak hours and times. What would you do to fix your financial situation:
(1) get a loan from the bank, buy another 7 buses and hope that somehow it will be enough
(2) raise the fare to 200 $ per passenger
(3) wait until next year and then let the passengers
negotiate the fare with the driver by a blind auction on the platform.
(4) fire all employees except 1 driver and 1 mechanic, close the main office and move to a back-office in the garage
(5) file for bankruptcy protection.
2) Currently average block size is less than 0.4 mb now that the stress test bullshit is over. Gonna be a long time until we even hit the 1 mb limit.
It is increasing at 0.2 MB per year, the max effective capacity is 0.8 MB, and traffic jams will start to occur when it is 0.6-0.7 MB
(Have a plane to catch, more on return)
6) Develop technology which safely allows 80,000 people to ride one bus with little or no difference in compfort and maintanance costs.
- Now each passenger pays the expected modest fee and the bus company has enough income to operate a very secure business.
Developing such technology is more challenging that the simplistic ideas of 'buy more buses', or 'charge more per ticket.' That seems to be the task that Blockstream is undertaking with their 'elements' suite of innovations.
sidechains could aggregate the activity of thousands of sidechain transactions to a single on-chain transaction. Even a tiny transaction fee at the user level passed up to the Bitcoin backing layer would support very robust infrastructure.
I would add that merchants of a certain size will provide pretty decent savings to customers who will participate in their company 'rewards program' or use company gift cards. If the merchant had their own branded currency system it must be worth at least as much to them as a silly little rewards card. This could bring a tsunami of value into what I've always called a 'subordinate chains' cypto-currency ecosystem. Sidechains would be an example but the word was not coined when I started promoting that scaling mechanism.
Seems to me that what Blockstream is shooting for is to be recognized as a trusted authority both technically and ethically in a world where sidechains are a major economic player. If a 'branded currency' is a useful thing to large corporations, they (unlike a gaggle of plebs) have the muscle to induce governments to lighten up and allow them to at least exist.
I would never expect the financial services industry proper to be very supportive of real sidechains operating under a 'free' backing store since they are doing very well under the current fully controlled systems. I could see this sector promoting something like XT which gives them the hope of monopolizing the take from a centralized and controlled solution just as they do with most fiat systems today.
