Market Extra: Outage on bitcoin exchange hits prices
A partial outage on digital currency exchanges such as Coinbase on Wednesday caused bitcoin prices to whipsaw, highlighting the need for a more robust infrastructure for the maturing digital currency.
In a matter of hours, one bitcoin BTCUSD, +4.86% , which soared above $ 11,000 in the morning, dropped $ 2,000, only to recover to $ 9,655 by late afternoon, according to Coindesk.
Read: Bitcoin slumps just hours after topping $ 11,000 milestone
Some bitcoin holders were unable to access their accounts held with the Coinbase exchange, while those who were able to trade saw slower-than-usual service.
Coinbase.com has not responded to an email requesting comments, but had the following message on their website and Twitter:
“Minor Service Outage: We are continuing to experience degraded performance on Coinbase.com, but are working on a resolution.”
Vast majority of traffic is being served but with slower performance. Our engineering team is actively working on this and should be fully resolved in a few hours
— Coinbase (@coinbase) November 29, 2017
“Coinbase is one of the most reputable digital currency exchanges, but it is also fairly new. Scaling your infrastructure 8 times in only five months is difficult to do and is bound to create some glitches,” said Matthew Gertler, senior analyst at Digital Asset Research, a firm that provides digital currency research to institutional investors.
See also: Bitcoin is definitely doomed, if you believe the German media
“The fact that the company was transparent with their communications and came back online quickly suggest that this was not a cyber attack, but rather an issue with failing to cope with the demand,” Gertler said.
Indeed, demand for bitcoin over the past several month has increased rapidly, pushing prices up 300% since July.
#Bitcoin is breaking all time records for 24 hour volume across all exchanges, coming in at $ 10,676,900,000 USD (and counting)
Data from @CoinMarketCap
— Bespoke Crypto (@BespokeCrypto) November 29, 2017
As demand for bitcoin surged, traditional Wall Street players have rushed to join the fun. According to the Wall Street Journal, Nasdaq aims to launch bitcoin futures in the first half of 2018. CME Group last month announced its plans to launch a futures contract based on bitcoin by the end of the year.
“Today’s incident highlights the challenges in this space as it continues to mature and attract institutional money,” said Igor Telyatnikov, co-founder and prisident of AlphaPoint, a firm that provides technology for digital currency exchanges.
“We need a more robust infrastructure for institutional-grade needs,” Telyatnikov said.