Every Bitcoin transfer, no matter how tiny, creates a transaction. But blocks are limited not just by time, but by size: they cannot exceed 1MB in the current system. Currently, they’re about 400KB, but occasionally peak towards 1MB. Once transactions start to accumulate continuously at a rate faster than the number that can be baked into a 1MB block within that roughly 10-minute schedule, all sorts of terrible things will start happening, resulting in the worst case in a sort of currency meltdown.
No! Blocks not about 400 KB now. Almost all bitcoin blocks very close to 1 MB limit (990-999 KB) at least last half year already. You can check this there:
https://blockchain.info/ru/blocksOr at any other blockchain browser/monitor.
And already there were few repeated periods when new transactions came much faster than they managed to include in the blocks by miners.
And... nothing terrible happened at such periods. Just minor troubles - increased commission fees for transactions and users with low commissions experienced delays in their payments. That's it, everything else worked and will continue to work without failures.
