Binance Pauses Bitcoin Withdrawals, Blames Network Congestion
Cryptocurrency exchange Binance temporarily paused Bitcoin withdrawals on its platform on Sunday, preventing the largest token by market cap from leaving the leading venue by trading volume.
Binance said its decision was based on congestion issues impacting Bitcoin’s network, adding that the exchange was “currently working on a fix” to reopen withdrawals “as soon as possible.”
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We've temporarily closed $BTC withdrawals as the #Bitcoin network is experiencing a congestion issue. Our team is currently working on a fix until the network is stabilized and will reopen $BTC withdrawals as soon as possible. Rest assured, funds are SAFU. — Binance (@binance) May 7, 2023
During the outage, speculation about the cause was rampant on Crypto Twitter. One large Twitter Spaces conversation ran the gamut from Ordinal-focused technical theories to international political conspiracies.
Binance reported an hour later that Bitcoin withdrawals had resumed.
Bitcoin was slightly in the green as of this writing, up less than 1% to around $29,000, according to CoinGecko. Meanwhile, crypto exchange OKX said Bitcoin deposit and withdrawal services were working fine, despite high transaction costs.
🚨 #BTC deposit and withdrawal services on #OKX are running fine. On chain transaction fee is currently high but our transactions are going through fine. 💡Protip: If you want to save a few bucks, please use the lightning ⚡network. pic.twitter.com/VR2SUB6xXg — OKX (@okx) May 7, 2023
Before they’re added to Bitcoin’s blockchain, transactions are broadcast to the network’s mempool where they wait to be selected by miners and inserted into Bitcoin’s next block. Currently, a sizable backlog of Bitcoin transactions is driving up transaction fees.
As of Sunday afternoon, the total number of unconfirmed Bitcoin transactions in the network's mempool totaled around 395,000, according to mempool.space. On April 26, that figure was 56,500, according to Blockchain.com.
At the same time, transaction fees on Bitcoin were sky-high. According to data from YCharts, Bitcoin transaction fees reached their highest levels in almost two years on Friday, averaging $9.62 per transaction.
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On Saturday, transaction fees averaged around $8.84, suggesting they were trending back down. Still, it represented an over 500% increase compared to six months ago, when Bitcoin transactions averaged around $1.45.
The uptick in congestion and higher transaction fees coincides with a steep rise in the number of inscriptions made through Ordinals, as people use the protocol for minting NFT-like assets on Bitcoin to create and trade fungible, BRC-20 tokens.
Started as an experiment in March by a pseudonymous on-chain data enthusiast named Domo, the market cap of BRC-20 tokens—which mirror ERC-20 tokens—has ballooned to $446 million, according to brc-20.io.
A week ago, the total number of inscriptions snowballed past 2.5 million. And as of Sunday, the total number of inscriptions cruised past 4.3 million, according to a widely-used Dune dashboard.
Source: Decrypt
