Increasing the block will solve the problem until the new size is not enough, which will be very soon. A larger block means a larger blockchain, and the nice thing about the blockchain is that you can download the entire thing. With a larger block it will outpace the storage advances and will not be downloadable for the average user, which means that only specifically equipped entities such as miners will be able to have a copy of it, and that is a big problem.
10x the transactions is not much at all. The comparison with the VISA network is not a valid one - with micropayments the volume could be 100x or 10000x - we should be able to accommodate it.
The only solution is to begin handling transations off-chain. But the problem is that there is no one good proposal for it. Until it is clear how off-chain transactions work, we will keep seeing this sort of stuff.
> With a larger block it will outpace the storage advances and will not be downloadable for the average user
This has nothing to do with the block size. The size of the chain is proportional to the number of transactions. Whether those are sliced-and-diced into small blocks or large ones is completely irrelevant to how big the chain is. The only thing the block size influences is how many transactions can be mined in one block, i.e. the rate at which transactions can be processed.
If you don't change the rate of block creation - then the rate of blockchain growth is proportional to the block size. If you increase blocks - then the blockchain will grow faster. This is kind of obvious.
But yeah - the size of the blocks does depend on the number and size of transactions and if you don't have transactions to fill up the block in full (i.e. so that its size is just under the maximal block size) - then the transactions will be the limiting factor.
I have no idea why Satoshi chose a 1MB limit. Probably for the same reason he chose a 21M BTC limit on the total number of bitcoins that can be mined: both are arbitrary numbers that he pulled out of a hat. But the next time I see him I'll be sure to ask.
> With a larger block it will outpace the storage advances and will not be downloadable for the average user, which means that only specifically equipped entities such as miners will be able to have a copy of it, and that is a big problem.
This is eventually going to be a problem sooner or later regardless. The fundamental decentralization of Bitcoin depends on everyone having the whole blockchain. Any sort of "checkpointing" mechanism inherently relies on trusting authoritative nodes about network state, at which point it's no longer decentralized.
(However this is somewhat of a distinction without a difference. In practice you are trusting the nodes on the network anyway - the network is authoritative because everyone agrees to treat it as authoritative. If everyone agrees to trust some other blockchain as "the real truth" then you can either accept the new authoritative network or be on your own chain that nobody else accepts - which is what happened to Ethereum after the DAO hack.)
This is a fundamental limit to the Bitcoin model and will have to be addressed sooner or later. The data is already past ~100 GB (and totally incompressible) and that's with blocks so small that the network is choking due to lack of capacity. This is only a few years' worth of records, what does the big picture look like in 20 years?
Segwit is absolutely mandatory to allow interfacing other chains in a secure manner. Pretty much everyone agrees transaction malleability is a huge design flaw (apart from some Chinese farms which are abusing it via AsicBoost).
What I specifically have a problem with is the way both sides have drawn arbitrary lines here. It's not SegWit or a larger block, we can have both. And in fact the Core proposal does include a larger block, on a surface level this dispute is over how much bigger it should be (the Unlimited devs want a much larger block right away). Again, pretty much everyone agrees that transaction malleability needs to be fixed except that group of miners.
On a deeper level it's about a power struggle between the Bitcoin Core devs and the Bitcoin Unlimited devs, and between the various factions of miners.
10x the transactions is not much at all. The comparison with the VISA network is not a valid one - with micropayments the volume could be 100x or 10000x - we should be able to accommodate it.
The only solution is to begin handling transations off-chain. But the problem is that there is no one good proposal for it. Until it is clear how off-chain transactions work, we will keep seeing this sort of stuff.