Transaction fees in the bitcoin system work differently from that in conventional payment systems due to the design of the bitcoin mining algorithm. In particular, transaction fees in the bitcoin system increase whenever the network is congested, and results from a simple VAR show that it is indeed the case. Under this feature, we also find that an increase in demand for bitcoin transactions drives out those of smaller volume. To account for the empirical findings, we build a model where users and miners together determine the level of the transaction fees. However, a back-of-envelope calculation shows that, compared with conventional payment systems, fluctuations of the transaction fee rate impose only a negligible cost to the users. But this calculation may underestimate the cost due to the crowding-out effect on small transactions during the congested period.