The cryptocurrency market is on fire in 2018, with leading Bitcoin and cryptocurrency trading platforms feeling the heat. More people than ever before are now looking to invest in cryptocurrency, with Binance, Bittrex, Bitstamp, Coinbase, and Kraken struggling to deal with the growing demand. More than 100,000 new users are putting through registration requests each day, forcing some exchanges to address system scalability, along with halting new registrations to reduce platform strain.
Working around the clock
The level of growth within the cryptocurrency market has been amazing to see, but it has been somewhat unexpected at the same time. As the pressure escalated and the daily trading volume reached $9.5 billion, Binance founder and CEO Changpeng Zhao admitted that his platform was adding near-enough 250,000 new users on any single day. Zhao said via an official statement, “Sorry guys, servicing existing members is higher-priority at this point. Full team working around the clock, both tech and support. Just too much demand, added 250,000 new users in the last 24 hours.”
250,000 new users in the last 24 hours. – Binance
With new user registrations reaching near-critical levels, back on January 4th Binance made the call to halt new registrations, “due to the overwhelming surge in popularity, Binance will have to temporarily disable new user registrations to allow for an infrastructure upgrade. We apologize for any inconvenience caused.” What’s clear is that Binance is only now getting to grips with the huge growth in user numbers.
Feeling the strain
Binance isn’t the only platform feeling the pressure, with Coinbase and Kraken also being forced to reallocate capital and resources to improve platform scalability. Kraken specifically has suffered issues regarding account registrations as demand has increased. Back in December, the exchange announced that it had implemented further site upgrades in order to accommodate new users. Labelling the current infrastructure as “degraded and unreliable,” throughout January major improvements are being made. Kraken stated, “We have made significant progress in the last week with the system upgrades and have realized moderate improvement in performance.”
So, why are cryptocurrency exchanges struggling?
The answer simply comes down to user demand. During late 2017, gaming giant Nexon purchased Korbit – South Korea’s third-largest cryptocurrency exchange – for $140 million. Taking this valuation as a benchmark, leading exchanges such as Bithumb, Binance, Bitstamp, and Kraken could be worth upwards of $1 billion, with Kraken specifically being valued $1.6 billion during its latest round of funding.
These values appear to be something of a double-edged sword, as with high-profit margins the demand on resources is growing. Keeping the pace has become a massive challenge, with cryptocurrency exchanges struggling to address the growing demand, especially as each new account needs to be run through notoriously strict AML (Anti-Money Laundering) and KYC (Know Your Customer) systems. These – while essential – require manual approval and verification thus can slow down procedures. Should an exchange fail to complete these processes then it could result in large fines and potential lawsuits. Given that 100,000+ users are trying to register at the world’s leading exchanges every single day, equating to over a million account approval requests each month, it’s easy to see how the backlog has come about.
Improvements are on the horizon
As the cryptocurrency market continues to become increasingly mainstream friendly, the press sue is surely going to increase on the world’s leading exchanges. Drastic changes over the next few months aren’t just needed, they’re expected, but until then, newcomers might find it tougher than normal to open a trading account.