Buying bitcoin from exchanges can involve lots of hoop-jumping, as customers navigate complex and tedious registration and transaction processes. Some people are now cutting through the whole tangled mess, and having their employers pay them in bitcoin directly.

Wagepoint, a startup based in Waterloo and Nova Scotia, Canada, offers Canadian and US companies an easy way to process payroll online. The firm handles payroll deductions for tax purposes and files all the necessary paperwork electronically. It has processed $120m in payroll payments using traditional fiat currency, but now, a growing percentage of customers are taking advantage of its bitcoin payment services, says CEO Shrad Rao.

“We started it in November 2013. It was a side project,” said Rao, explaining that the firm was interested in bitcoin, and pulled the service together quickly. We didn’t imagine we’d get any uptake,” said the CEO, and initially he was right. Nothing happened during November and December, but then, in January this year, he received his first bitcoin request from a customer, which paid out $2,000 worth of bitcoin in salaries.

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Wagepoint makes it as easy as possible for companies to make payments in cryptocurrency. Customers don’t have to handle bitcoin at all. Instead, Wagepoint takes its fiat currency and handles the convergence for them. In Canada, it uses CA Virtex for the exchange.

Perhaps predictably, tech firms are at the front of the queue when it comes to paying their employees in bitcoin. Structur3D Printing, based in Kitchener, Ontario, produces a system for extruding paste that can be used in 3D printing. Co-founder and president Charles Mire is targeting everything from cake makers and chocolatiers through to hobbyist ‘makers’ with the product, which can handle everything from silicone to cake icing.

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Transaction fees on the bitcoin network are often forgotten about. Yet in bitcoin they are more important than on other payment networks. Fees currently serve as protection against the network being flooded with arbitrary transactions. Eventually, they will also be required to incentivise bitcoin miners to continue providing security to the network.

Contrary to other payment networks, the fees will not be set centrally, but will be determined by a market between users and miners. The lower bound of transaction fees will be determined by the marginal cost incurred by miners for including transactions. This, in turn, is determined by the speed at which information is spread around the network.

Bitcoin, the protocol, is a set of rules for the construction, distribution and agreement of financial transactions. The excitement surrounding its invention stems from its ability to achieve consensus among anonymous participants on the order in which transactions were issued on the network. This permits the construction of an inclusive financial system that is free from discrepancies between market participants.

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However, the network is only guaranteed to come to consensus over a period of time and, in fact, the bitcoin network is in a constant state of flux, where nodes differ in their record of the history of all transactions. Subsets of nodes that agree on a common set of transactions are known as partitions.

An event, such as the discovery of a new block in the block chain creates a partition in the network. When a miner finds a new block, it is the only node in the network that thinks that the length of the block chain has increased. The rest of the network will find out about the block consequently, with the delay largely dependent on the number of transactions included.

Each extra transaction included in the block adds to the time that it takes for blocks to reach every node in the network. Miners that are slow to hear about new-found blocks spend time working on redundant problems, which hurts their margins. Furthermore, this delay increases the possibilities for malicious attackers to double spend funds on the network.

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