The blockchain can be truncated to move old transactions off. There's also no need to work with the entire thing unless you're mining.

http://bitcoin.stackexchange.com/questions/2798/are-there-an...

Two points, which are not by any means the whole story but simply things to consider:

- Hard drive space is increasing faster than the blockchain size

- New protocols like sidechains and the lightning network could help offload much of the transaction load, making certain bitcoin transactions essentially an settlement representing many thousands, thereby dramatically reducing overall data size.

Yes, that's why using a blockchain is only feasible for applications that do not generate too much data. With one transaction being 500 bytes in size, a billion transactions occupy 500 GB, which is still managable by an average PC. Once Bitcoin reaches Visa-level transactions rates (100 million per day), there's 500 TB of transaction data per year. That would be a problem for today's network, but it is still in the realm of feasibility as long as the professionalization continues.

for day to day usage not all the data needs to be kept. for example, you could keep just the unspent outputs (instead of all previous transactions).

But yes, some archival nodes would be needed to keep the entire history.

It already takes up too much space. It's what, 40G now? That's a significant fraction of the size of economy hard disks.

Plus it takes forever to download 40G for new users.

They keep talking about trimming the blockchain, but as far I know (and correct me if I'm wrong) the official client does not support that.

Yes, that's one of main argument raised against increasing transactions per block - it would increase block size and ledger growth rate.

Increasing the block size doesn't increase the transactions per block. Usage does.