On May 22, Coinbase.com, the largest centralized online bitcoin exchange, operating in 32 countries, experienced a partial outage resulting in degraded performance, deposit/withdrawal delays, and some customers were unable to log in to their accounts.
Bitcoin crossed the $2000 mark on May 20, 2017, and continued to climb to a new all-time high of $2,760 on May 25. The price then dropped quickly down to $2,347 at the end of the day on May 25 and then shot back up to $2,639 on the morning of May 26. According to the Coinbase status page, an issue with customers incorrectly receiving CVN verification errors and 24-hour lockouts when attempting to verify new credit or debit cards was submitted for investigation on May 22 (and resolved on May 24). Also on May 22, issues with site response times and customers being unable to sign in to their accounts were reported, identified, and resolved.
However, slow load times and degraded performance of the Coinbase website continued through May 23, 24, and 25. At the time this article is being written, there still seems to be a problem with processing credit and debit cards still, but no other incidents have been reported. According to a statement from Coinbase:
“Coinbase has experienced unprecedented traffic and trading volume this week. As a result, Coinbase.com has suffered a few outages and downgraded performance for some users this week. Our engineering and support teams are working around the clock to restore our site to normal performance.”
Bitcoin was not the only currency effected on the Coinbase platform, ether traders also experienced setbacks. On May 24, Coinbase reported that they saw a backup of outgoing ETH transactions. Coincidentally, Kraken, another major US-based bitcoin and altcoin exchange reported degraded performance due to all-time record traffic. A statement from Kraken explained:
“The website and API are currently slow or unresponsive for many clients. We are working to resolve but do not have an ETA for when things may return to normal at this time. We are currently seeing all-time record traffic and performance may not return to normal until the load goes down.”
Kraken and Poloniex both experienced malicious DDoS attacks earlier this year in April 2017.
There is speculation that the high volume of traffic, a large number of new signups, and a surge in popularity which have overwhelmed the Coinbase website since May 22 are coming from Japan where Bitcoin was recently given legal status as a payment method, and several businesses including Peach airlines have begun accepting bitcoin payments. It has also been stated that a large number of new users are originating from South Korea where trade volumes have been going through the roof and bitcoin has been traded for as high as $3,800 and routinely selling for $1,000 above the global average. Bitcoin trade in South Korea has been growing on a massive scale since the October 24, 2016, announcement from South Korea’s Financial Services Commission stating the intended systemization of digital currency on a full scale in tandem with trends in Japan, U.S. and around the globe.
As adoption and trading volume increases, the issue of scaling takes on a broader definition and becomes a challenge which faces, not only Bitcoin developers, but also developers of digital currency exchanges who must coordinate bitcoin transactions with fiat transactions. Although decentralized fiat/bitcoin exchanges exist, like LocalBitcoins and Bisq (formerly Bitsquare), centralized exchanges like Kraken and Coinbase are more convenient, more popular, and get most of the trading volume. Centralized exchanges have in the past, and may continue to be a damaging single point of failure in the cryptocurrency ecosystem, but until a better solution catches on and becomes the standard, it’s hoped that they will expand and update their platforms to meet the demand of a growing number of users.