Binance Pauses Bitcoin Withdrawals, Blames Network Congestion
Cryptocurrency exchange Binance temporarily halted Bitcoin withdrawals on its platform on Sunday, preventing the largest token by market capitalization from leaving the leading venue by trading volume.
Binance said the decision was based on congestion issues affecting Bitcoin’s network, adding that the exchange is “currently working on a solution” to reopen withdrawals “as soon as possible.”
During the outage, speculation about the cause was rife on Crypto Twitter. A large Twitter Spaces conversation went from Ordinal-focused technical theories to international political conspiracies.
Binance reported an hour later that Bitcoin withdrawals had resumed.
Bitcoin was slightly in the green at the time of writing, up less than 1% to around $29,000, according to CoinGecko. Meanwhile, crypto exchange OKX said Bitcoin deposit and withdrawal services were working well, despite high transaction costs.
Before being added to Bitcoin’s blockchain, transactions are broadcast to the network’s mempool where they wait to be chosen by miners and inserted into Bitcoin’s next block. Currently, a significant backlog of Bitcoin transactions is driving up transaction fees.
On Sunday, there were close to 44,000 transactions in Bitcoin’s mempool waiting to be confirmed, according to Blockchain.com. While the measure was a noticeable decrease compared to around 56,500 transactions on April 26, it represented a 985% increase in unconfirmed transactions compared to six months ago.
At the same time, the transaction fees on Bitcoin were sky high. According to data from YChartsBitcoin transaction fees hit their highest levels in nearly two years on Friday, averaging $9.62 per transaction.
On Saturday, transaction fees averaged around $8.84, suggesting they were on the decline. Still, it represented an increase of over 500% compared to six months ago, when Bitcoin transactions averaged around $1.45.
The rise in congestion and higher transaction fees coincides with a steep climb in the number of inscriptions made through Ordinals, as people use the protocol to mint NFT-like assets on Bitcoin to create and trade fungible BRC-20 tokens.
Started as an experiment in March by a pseudonymous on-chain computer enthusiast named Domo, the market value of BRC-20 tokens – which reflect ERC-20 tokens– has ballooned to $446 million, according to brc-20.io.
A week ago, the total number of inscriptions snowballed over 2.5 million. And as of Sunday, the total number of inscriptions passed 4.3 million, according to a widely used dune dashboard.
