Coinbase, the world’s largest Bitcoin exchange, went offline last week due to a massive increase in Bitcoin price. The rising value of the cryptocurrency led to several outages across the Bitcoin exchange.
Despite being one of the most well-funded Bitcoin exchanges, Coinbase was not able to handle the dramatic rise in Bitcoin price recently.
Those who deal in Bitcoins must have noticed the sudden rise in Bitcoin price. However, when mega-platform Coinbase was dragged offline, it came as a shock.
Users faced problems with different types of services offered by the exchange during the week. The worst issue was when the Coinbase site and mobile applications went offline on May 25.
Users were not able to access the Bitcoin exchange for several hours, on account of high levels of Bitcoin trading and traffic on the site.
Burst of Bubble
Coinbase operates in around 32 countries around the world and is the largest Bitcoin exchange, but it was not able to cope up with the demand of the cryptocurrency.
The website was reported to have become slower and users were not able to create new accounts, and it eventually went offline.
Many customers, who were new to the cryptocurrency and took interest after hearing stories about investors making millions in profits, started flooding the website for speculation purposes. This quickly turned into a bubble that ultimately crashed the website.
Bitcoin Crosses $2,000
For the first time, Bitcoin price has increased to such an extent that it has crossed the value of $2,000 and reached a new high of $2,805 on the largest Bitcoin exchange, Coinbase.
This price is double that of the cryptocurrency near the beginning of May. It then fell to $2,307 on May 25. After that, the price of Bitcoin has fallen and stabilized, though the value of the cryptocurrency is presently over $2,400.
As a result, there was a dramatic surge in traffic to Coinbase and the trading volume went up.
The rise in Bitcoin price seen over the past few days is a 500-times increase when compared to the Bitcoin price over the last few years.
The support teams at Coinbase have worked continually to deal with the unprecedented rise in traffic and visitors to the website. Yet, the website still suffered outages and eventually went offline.
In addition, the performance of the site also depreciated due to the rise in Bitcoin price. Many users complained about delays in the deposit or withdrawal of Bitcoin.
The team at Coinbase is however still working to solve these problems and the website is slowly being restored to its regular performance.
Causes for Upward Drive
For those in America, the sudden increase in the value of Bitcoin might seem something of a puzzle, as the payment network is not yet mainstream or widespread in the country.
However, the recent hike in Bitcoin price is probably due to an increasing demand for the cryptocurrency in Asia.
The Japanese government has recently recognized Bitcoins and this offered it greater legitimacy in the Asian economy. After this, there has been a steady increase in money transfer using Bitcoin, with services transferring money among countries, causing rise in Bitcoin price.
The trading volume in Japan and Korea has also increased due to the recent legislation that permitted the retailers of Japan to accept Bitcoin as legitimate currency.
Garrick Hileman, a Cambridge Center for Alternative Finance expert on Bitcoin, stated data that indicates another cause behind the sudden surge—speculation.
Many users are purchasing and selling Bitcoins for this reason alone, rather than purchasing an item or sending money to others.