As Bitcoin hits all-time highs in 2024, the Coinbase exchange suffers a massive outage, plunging millions of users into chaos. Analysis of an event symptomatic of the structural limits of the crypto sector, incapable of managing the explosion in demand.
Coinbase paralyzed! The Bitcoin madness continues
On February 28, 2024, just as Bitcoin approached $60,000, breaking its 2021 record, Coinbase, the largest crypto exchange, suffered a blackout. For several hours, the site and mobile applications are out of service.
Impossible to buy, sell or exchange Bitcoin for millions of users caught off guard. The outage comes in the midst of a speculative frenzy, as the price of the crypto star soars under the influence of record demand.
Some see this as a warning sign of the sector’s structural inability to absorb a massive influx of new entrants. Others outright accuse Coinbase of deliberately orchestrating this chaos to serve the interests of its investors.
The limits of an immature infrastructure
For Coinbase, this breakdown unprecedented is due to the sudden influx of “extreme traffic volume”, which brought its servers to their knees. The company denies any manipulation, citing a simple technical problem.
But this incident reveals the fragilities of an ecosystem that is still in its infancy, incapable of managing exceptional peaks of activity. As the popularity of Bitcoin continues to grow, the strength of exchange platforms is a critical issue.
Some Coinbase competitors, like Binance, take the opportunity to mock the amateurism of the American exchange and praise the reliability of their own services. But the entire crypto sector appears immature in the face of the influx of new users attracted by the rush for new digital gold.
What about crypto decentralization?
Beyond the technical failures, this episode also reveals the limits of the dominant model of centralized platforms like Coinbase. In theory, one of the pillars of cryptos is precisely their decentralized nature, without trusted third parties.
But in reality, most users go through private intermediaries who completely control access to the network. This increased centralization poses serious challenges in terms of sovereignty and resilience of the crypto ecosystem.
In the long term, some experts believe that only a truly peer-to-peer model will allow Bitcoin and altcoins to scale and withstand major shocks. But this paradigm still seems far away, as giants like Coinbase now overwhelmingly dominate the sector.
The incident at Coinbase clearly illustrates the growth challenges facing the crypto ecosystem, a victim of its own success. As the craze around Bitcoin continues to grow, the solidity of essential infrastructure is clearly in question.
Maximize your Tremplin.io experience with our ‘Read to Earn’ program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
