Bitcoin Forum

You have a lot of reading to do.  Most of these questions have already been answered many times by many people.

One has a market where no matter what the increase in price the supply cannot increase, while the demand keeps increasing at an exponential rate. So in theory the price of transaction fees should rise to infinity. The more likely scenario is that Bitcoin would become a failed experiment and the market would "solve" the problem by making Bitcoin worthless.

The tx fees wouldn't rise to infinity. They would rise exactly as high as people are willing to pay for them. In practice it would lead to most small transactions not being done in the blockchain anymore and instead a limited amount of high value transactions would be done. What effect this would have to the value of bitcoins, and their general appeal, is unknown, but my view is that the effect would be deeply negative.

Eventually some sort of increase is probably required. Based on the calculations the current max block size is quite small and even though it's adequate now, it's not adequate for any kind of mainstream usage. We probably do need scarcity regarding the block size, that seems to be clear. It's just a matter of how much scarcity and how do we define it.

Truth

The only thing which failed here was your logic. There will be an equilibrium between supply and demand for transaction volume. If bitcoin transactions become too expensive, people will react by making their transactions count - that means avoid unnecessary transactions or use other means to settle a payment. It's a DYNAMIC equilibrium, just like traffic on a road. People will choose the right vehicle for the right purpose. You don't take the airplane to go groceries shopping. Yet airplanes are a viable business.

Wow. There are loads of solutions (that are actually already implemented) to make transactions off the block chain. Once prices "rise to infinity" (??) then those services will be relied on "infinitely".

The big debate is whether these services are an acceptable alternative for low value block chain transactions.

False, and a point that has been answered more than once elsewhere.

There was once "unlimited buffalo" untill people started shooting them from trains and made them extinct.

tl:dr making the block size unlimited would destroy bitcoin.

To use the air travel analogy. If the total worldwide airplane capacity were limited in perpetuity to the worldwide airplane capacity of 1908 (5 years after powered flight) people would not be using airplanes for domestic or international travel they would be using ships and trains instead, and airplanes would as a consequence not be a viable business. Of course the market will adapt to this artificial scarcity, by not using Bitcoin. 

That is ridiculous.

You might as well say if international treaties limit the number of nukes, no one would use nukes, or if the air force only has so many jet-fighters, they won't use them, or the navy won't use aircraft carriers if there is a limit to how many have been built.

The market will adapt by making the best possible use of the limited resource, not by refusing to use it at all.

Its true we don't carry gold coins around in our pockets anymore, but an ounce of gold will still buy you a nice toga, belt, and sandals just like it always did.

-MarkM-

Transaction cost would rise till there is an equilibrium between the current bitcoin price and the cost of a Bitcoin transaction in relation to other systems.
It would limit the price of a Bitcoin to something around $100.

The economy can then continue to grow by distributing the hoarded coins to people who provide goods and services for the economy.

I am not sure how you arrived at that specific quantitative prophecy but remember a lot of the scaling problem is by trying to grow serially instead of in parallel. Longer and longer serial blocks cause more and more problems in scaling, largely because they all need to be kept in sync as to the number of coins in total in that specific serial blockchain.

Multiple blockchains could let us attain that same $100 per blockchain, spawning however many blockchains it takes to saturate the world. Maybe one blockchain for every major city everywhere. Maybe also a few "outback" chains for large areas devoid of cities but nonetheless having populations.

One "world currency" is not actually or necessarily the be-all end-all goal "everyone wants".

We see "regional currencies" being advocated a lot in recent decades,een them throughout history.

It is not always ideal to adopt some foreigner's currency instead of using / creating your own.

It will be interesting to see how scalable Ripple's consensus system turns out to be. Maybe consensus by trust links is massively cheaper than proof of work and just as scalable or even more scalable; maybe all this electricty burned in hashing really is wasteful as some have long suspected, and Ripple's insight into how to dispense with that huge overhead cost is the breakthrough that will bring practical, affordable, decentralised consensus ledger cryptocurrency to the world.

-MarkM-