Binance momentarily halted Bitcoin withdrawals on Sunday owing to network congestion. The exchange stated that it was attempting to find a solution in order to quickly resume withdrawals. In the course of the outage, a variety of theories, from technical problems to political conspiracies, were spreading on social media.
A sizable backlog of pending Bitcoin transactions that need to be added to the blockchain appears to be the cause of the issue. On April 26, there were only 56,500 pending Bitcoin transactions; as of Sunday, there were over 395,000. Transaction fees have soared due to this backlog, hitting an average of more than $9.00 on Friday, which is the highest level in almost two years.
More users are using the Ordinals protocol to produce and exchange BRC-20 tokens, which are comparable to ERC-20 tokens used on the Ethereum network. This has resulted in congestion and higher transaction costs. The market valuation of BRC-20 tokens, which was started as an experiment in March by a pseudonymous on-chain data enthusiast named Domo, has increased to $446 million with more than 4.3 million inscriptions as of Sunday.
Bitcoin was slightly in the green as of this writing, up less than 1% to around $27,960, according to ‘CoinMarketCap’. Crypto exchange OKX reported that despite high transaction costs, the Bitcoin deposit and withdrawal services were operational.
The increase in BRC-20 token inscriptions is causing more transactions to compete for space in Bitcoin’s mempool, driving up costs and generating congestion. Other exchanges and wallets have also experienced concerns with excessive fees and delayed transactions, so this issue is not exclusive to Binance.
The cryptocurrency community has long been troubled by Bitcoin’s scaling difficulties. Although various ideas, like the Lightning Network, have been put forth, they have not yet gained widespread acceptance. The network will probably continue to experience congestion and expensive prices until a workable solution is found.
Despite these difficulties, Bitcoin continues to draw institutional investment and is still the most valuable cryptocurrency by market cap. Investors and cryptocurrency lovers alike will be intently monitoring its long-term sustainability and capacity to address its scalability challenges.