Binance Calls Bitcoin Withdrawal Pause ‘A Learning Opportunity’
Crypto exchange Binance has resumed Bitcoin withdrawals after a temporary pause, with transactions shown as successfully sent to users’ wallets. However, there may still be delays with the actual transaction confirmation.
Binance twice halted Bitcoin withdrawals from its platform in the past 24 hours citing “a congestion issue,” which inevitably led to massive speculation about the exchange’s health on social media.
The exchange, the world’s largest by trading volume, moved to address the issue, saying it was adjusting mining fees.
The exchange too noted that it would continue to monitor activity on the chain, and indicated that it was also looking into using Bitcoin’s Lightning Network to speed up withdrawal times.
“We are looking to enable BTC Lightning network withdrawals for users in the next few months. The BTC Lightning network works just like any network; users can withdraw via the Lightning network from the Binance platform to their private wallets. More details will be shared by our team as they become available,” a Binance spokesperson said Decrypt.
Bitcoin mempool clogged
The pause on Bitcoin withdrawals from Binance came amid a drastic increase in unconfirmed transactions, with data from Timechaincalendar showing more than 420,000 pending transactions going back as many as 55 blocks at the time of writing.
Bitcoin mempool, short for “memory pool”, is a type of data structure used by the Bitcoin network to store unconfirmed transactions. When a Bitcoin user initiates a transaction, it is broadcast to the network and added to the mempool of every full node that receives it.
The mempool acts as a kind of waiting room for transactions before they are included in a block by a miner. Miners prioritize transactions with higher fees, so transactions with lower fees or larger sizes may remain in the mempool for a longer period of time.
One of the possible reasons for the recent increase in Bitcoin transaction fees, which currently stand at 245 sat/vB, or $9.55, for low-priority transactions, according to mempool.space, is Bitcoin’s significant lag to Ordinals, a protocol used for embossing. NFT-similar assets on Bitcoin.
Called inscriptions, the total number of Bitcoin-based digital assets rose above 4.6 million on Monday, according to data available at Dune Analytics.
To put that into perspective, just last week Bitcoin Ordinals subscriptions totaled 2.5 million.
Binance outflows
Another point of concern for some users was the large Bitcoin outflows from the exchange. However, this appears to be the movement of funds between Binance’s hot and cold wallets.
“Many people are commenting on the huge Bitcoin outflows from Binance today. Two transactions of 117K and 40K Bitcoin respectively. In reality, these Bitcoin are sent to newly created change addresses belonging to Binance. Effective outflows are most likely only 10,100 Bitcoin. tweeted Julio Moreno, head of research at the chain analysis platform CryptoQuant.
Binance also confirmed this, saying that “this ‘outflow’ is actually movements between Binance hot and cold wallets due to the BTC address adjustments.”
The exchange has also referred to DefiLlama’s data “for accurate information” regarding the wallet movements.
Despite all assurances, the price of Bitcoin still fell to a one-week low of $27,790 on Monday morning.
The leading cryptocurrency traded hands at $27,955 at the time of writing, down 3% on the day, per CoinGecko.
