Binance Temporarily Pauses Bitcoin Withdrawals Due to Network Congestion
by Bitcoin Transactions Face High Fees and Backlogs on Binance.
On Sunday, cryptocurrency exchange Binance announced that it was temporarily halting Bitcoin withdrawals from its platform due to congestion issues impacting the network. This action stopped the largest token by market capitalization from being withdrawn from the platform with the highest trading volume.
Binance Halts Bitcoin Withdrawals
Binance stated that they were actively resolving the issue and aiming to resume withdrawals as soon as possible. During the outage, speculation about the cause of the issue was rampant on Crypto Twitter, with discussions ranging from technical theories to international political conspiracies. An hour later, the exchange announced that withdrawals of Bitcoin had started up again.
Transaction Costs Remain High
OKX, a crypto exchange, has confirmed that their Bitcoin deposit and withdrawal services remain operational despite the surge in transaction fees. However, there is currently a significant backlog of Bitcoin transactions, which is contributing to the elevated fees. As of Sunday afternoon, the network’s mempool contains around 395,000 unconfirmed Bitcoin transactions, according to mempool.space.
Bitcoin Transaction Fees on the Rise
On April 26, the figure was 56,500, according to Blockchain.com. Transaction fees on Bitcoin were sky-high, reaching their highest levels in almost two years on Friday, averaging $9.62 per transaction, according to data from YCharts. On Saturday, transaction fees averaged around $8.84, suggesting they were trending back down.
Ordinals and BRC-20 Tokens Drive Congestion
The recent surge in network congestion and elevated transaction fees is linked to a notable uptick in the volume of transactions being executed through Ordinals. Ordinals is a protocol that utilizes Bitcoin to create fungible BRC-20 tokens, enabling the minting and trading of NFT-like assets. Initially launched as an experiment in March by an anonymous on-chain data enthusiast known as Domo, the market capitalization of BRC-20 tokens, which are similar to ERC-20 tokens, has surged to $446 million as per brc-20.io.
According to a widely-used Dune dashboard, the total number of transactions using Ordinals surpassed 4.3 million as of Sunday. Although the increase in BRC-20 token transactions has resulted in network congestion and higher transaction fees, it also signals a rising interest in tokenization on the Bitcoin network.
In conclusion, the temporary halt of Bitcoin withdrawals on Binance highlights the impact of congestion on the Bitcoin network, which has driven up transaction fees and created a backlog of unconfirmed transactions. The rise in BRC-20 token inscriptions through Ordinals indicates growing interest in tokenization on the Bitcoin network.
Disclaimer
The information presented in this Blogpost is solely for educational and informative purposes and should not be misconstrued as investment, financial or legal advice. Cryptocurrencies are a highly unstable and speculative market and their worth is susceptible to substantial fluctuations. Therefore, it is advisable to conduct personal research and seek counsel from qualified experts before making any financial decisions.
