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The other side of Bitcoin’s ATH: Outages

Jan 07, 2021
Bitcoin ATH

The 3-year awaited bull-run

The father-and-son of blockchain technology, Bitcoin, has recently risen over it’s all time high (ATH) and blasted through the US$ 30.000 mark on the morning of the 2nd of January 2021 [1]. For those in the digital asset industry, this episode has a much higher value than the price appreciation and potential monetary gains that come with it; it is about adoption. Adoption of a technology we believe is – and will continue – changing the world in ways we can’t imagine. Adoption, not only from savvy developers and quick-scheme investors, but from a massive retail base and financial institutions worldwide.

Outages, what are they and their consequences.

Yet, the milestone didn’t come alone. Arguably, it wouldn’t have come at all had it not been for its close friend, volatility. Along with the good news, volatility indirectly caused outages across major cryptocurrency exchanges. Scaling connectivity issues arose in Binance and Coinbase exchanges, based on a non-linear relationship between price change and traffic (if Bitcoin rose 5%, traffic would increase by 30 times [2]) [3]. 

“Outages usually come along with poor performance such as APP/API/WEB getting stuck, latency and even failure to place/cancel orders, because there are too many requests from the traders to proceed for the server (the exchange), thus the match system unable to load all these requests and finally ‘overloads’” [4]. 

This is not the first time it happens. In 2020 alone, multiple occasions of outages due to price surges of digital assets (Bitcoin mainly) impacted numerous exchanges, including BitMEX, Kraken, and the previously mentioned Binance and Coinbase [5][6][7][8]. 

Users’ inability to access their funds and portfolios during times of high volatility could cause the liquidation of positions and/or extreme losses [9]. Having robust technology, a risk mentality (asking ‘what could go wrong?’ on every process), and the right mechanisms in place to monitor those risks (varying traffic and submitted orders, for example), is essential for the success of any digital asset exchange.

SCALABLE White Label 

With Scalable Solutions, you found a partner to White-Label your Digital Asset Exchange that religiously surpasses industry standards in every area of importance, with no unscheduled downtime or unexpected system failures that could disrupt trading activities, backed up with an SLA (Service Level Agreement). During Bitcoin’s all time high run, our clients did not experience any outages or issues with their infrastructure despite high demand. With latency below 800 microseconds, over 100,000 transactions per second, high-octane order-matching engine, up-time over 99.99% and 300 billion orders processes worth over US$2 trillion, we try to lay out the unmatched technology that makes us proud, and our clients successful. 

 

 

 

 

 

References

[1] It broke its previous ATH with a valuation of US$ 23.800 in Binance on the 16th of December, and has set a new level at ~ US$ 34.780.

[2] Zhao, Changpeng (cz_binance). “Still some latency issues here and there. Working on it, all hands on deck. Folded hands. Bitcoin goes up 5%, traffic goes up 30x.” 16 December 2020. 11:46 AM. Tweet.

[3] Pirus, Benjamin. “Binance and Coinbase Suffer Outages as Bitcoin’s Price Soars.” Cointelegraph, Cointelegraph, 16 Dec. 2020, cointelegraph.com/news/binance-and-coinbase-suffer-outages-as-bitcoin-s-price-soars?utm_source=Telegram. 

[4] “Huobi Vice President Share Opinions on Understanding Why Cryptocurrency Exchanges Can Face Outages.” PR Newswire, 18 Sept. 2020, www.prnewswire.com/news-releases/huobi-vice-president-share-opinions-on-understanding-why-cryptocurrency-exchanges-can-face-outages-301134042.html. 

[5] Pirus, Benjamin. “Bitcoin Go up, Coinbase Go down: Exchange Outages and Trader Outrage.” Cointelegraph, Cointelegraph, 23 Nov. 2020, cointelegraph.com/news/bitcoin-go-up-coinbase-go-down-exchange-outages-and-trader-outrage. 

[6] Wright, Turner. “Coinbase Repeats Pattern of Shutting Down When Bitcoin Gets Volatile.” Cointelegraph, Cointelegraph, 3 June 2020, cointelegraph.com/news/coinbase-repeats-pattern-of-shutting-down-when-bitcoin-gets-volatile. 

[7] Abdel-Qader, Aziz. “Major Crypto Exchange Suffer Outage During Bitcoin Surge.” Finance Magnates | Financial and Business News, Finance Magnates, 29 Apr. 2020, www.financemagnates.com/cryptocurrency/exchange/major-crypto-exchange-suffer-outage-during-bitcoin-surge/. 

[8] Bambrough, Billy. “Sudden ‘Major’ Outage Sparks Serious Bitcoin Exchange Warning.” Forbes, Forbes Magazine, 20 May 2020, www.forbes.com/sites/billybambrough/2020/05/20/sudden-major-outage-sparks-serious-bitcoin-exchange-warning/?sh=41044eed3a70. 

[9] Haig, Samuel. “Volatility: $230M in BitMEX Liquidations Hit Bulls and Bears Alike.” Cointelegraph, Cointelegraph, 3 June 2020, cointelegraph.com/news/volatility-230m-in-bitmex-liquidations-hit-bulls-and-bears-alike.

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