What does it take for handling capacity to increase?
A forking change to the protocol, and the consensus of all the users to switch to the new protocol.
So what? As more transactions happen the waits will continue to go up?
And the fees. That's the intended design, yes.
You learn something new every day.
It is stated in the original "Satoshi white paper" that miners can/will be compensated with the transaction fees that users pay to provide an incentive to be included in the next block.
Users pay these fees to compete for limited block space. If the block spaces is unlimited, then it has no value. It is the limited nature of the block space that gives it value. As such, if there are more transactions than there is space available, then some transactions (those that pay the smallest fee per byte) have to wait for a later block.
Eventually an equilibrium is reached, where individuals would choose not to send a transaction rather than to pay the necessary fee. This limits the number of transactions that are sent.
This equilibrium adjusts if more block space is available, or if the value of the transactions being sent are higher.
Meanwhile, third-party service providers can reduce the number of blockchain transactions necessary.
Imagine a brand new service provider comes along (We'll call them "Asiv").
Asiv issues a small 3 ⅜ × 2 ⅛ in (85.60 × 53.98 mm) plastic card with a magnetic stripe on the back. Each card is assigned a unique account number by Asiv.
Asiv contracts with merchants to accept this card for payment on products and services.
When you as an Asiv carrying customer make a purchase at an Asiv accepting merchant, you swipe your card, and sign a receipt. Asiv keeps track of all the payments made to all the contracted merchants. Then once a day they make a single payment in bitcoin to the merchant covering the total of all the purchases made in the past 24 hours. Therefore a merchant might have 100 Asiv purchases per day, but only receive a single bitcoin payment on the blockchain to settle the account at the end of the day.
The merchant can accept payment from the customers without having to wait for bitcoin confirmations, and the customers don't have to make a separate bitcoin transaction fee payment on every transaction. There is just one transaction fee made by Asiv on their single payment to the merchant (or perhaps even a single transaction that pays multiple merchants all at once). Asiv covers this cost with the fees that the merchant agrees to pay to Asiv in the contract they sign.
A customer can use their Asiv card and make purchases all month long. Then at the end of the month, they make a single Bitcoin payment to Asiv paying only a single transaction fee.
