Skyrocketing fees are fundamentally changing bitcoin

Enlarge (credit: Thomas Trutschel / Getty Images News)

Originally, one of bitcoin's big selling points was that payments would be fast, convenient, and cheap. "The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions," wrote bitcoin founder Satoshi Nakamoto in the white paper announcing the technology.

"With bitcoins, transfers can take place across continents and timezones with no problems, no timelags, and only minuscule transaction fees," wrote economics reporter Felix Salmon in 2013.

Until the beginning of this year, bitcoin fees tended to be well below $1, and often less than $0.10. Bitcoin supporters liked to point out that fees on the bitcoin network were often a lot less than the fees merchants paid to accept credit card payments. But in recent months, bitcoin's popularity has outstripped the network's ability to cope with growing demand.

Read 20 remaining paragraphs | Comments