"The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions"
Clearly lowering transaction cost is one of the basic ideas behind Bitcoin that has now failed.
Nope, it doesn't mean that. There is one point you seem to miss: relative to Bitcoin, the transaction fee is nonexistent. Yeah, it's high when converted to dollars, but still, the promise is fulfilled.
If the minimum transaction fee is X then the minimum reasonable transaction is ~10-20x. Based on current fees you can't do 0.0001 BtC transactions, thus it fails one of the primary goals and the entire value from irreversible transactions.
Really this get's to the hart of irreversible transactions. Without artificial limits like the current 1MB block size transactions take meaningless amounts of computation and bandwidth and so they should basically be free. It's really oversight which is why Visa can get away with 30cents or more for what take a computers well under 1/1,000th's of a cent to maintain.
