On Sunday, cryptocurrency exchange Binance put a temporary halt on Bitcoin withdrawals from its system, keeping the largest token by market cap from leaving the top trading exchange.
Trading may be extremely uncomfortable during times of network congestion because deposits and withdrawal requests frequently take a long time to process. It is thought that Binance’s decision to halt withdrawals is a means of relieving its users’ tension until the traffic is cleared.
The exchange said that it was “currently working on a fix” to resume withdrawals “as soon as possible,” citing network congestion as the reason for its decision.
The fact that Binance has developed a reputation as the biggest exchange with the highest liquidity, as demonstrated by its proof of reserve asset, has helped to maintain calm in the community. Even with the record listing of PEPE and Floki Inu meme coins over the weekend, Binance has continued to dominate the market.
Thoughts concerning the stability of the Bitcoin protocol have been raised in the market due to the persistent congestion.
Crypto exchange OKX reported that despite high transaction charges, the Bitcoin deposit and withdrawal services remained operational.
Transactions are broadcast to the network’s mempool before being placed into the Bitcoin blockchain. From there, they wait to be chosen by miners and included in the next block of the Bitcoin. Transaction costs are now increasing due to a significant backlog of Bitcoin transactions.
As more users utilize the system for minting NFT-like assets on Bitcoin to produce and trade fungible BRC-20 tokens, there is a sharp increase in the number of inscriptions made through Ordinals, which is correlated with an uptick in congestion and increased transaction fees.
The blockchain ecosystem is known for using Bitcoin as its most flexible protocol. Given that various smart contract functions are now being created on the network, this recognition could soon be abolished. Numerous attack vectors present in these smart contracts have the potential to seriously jeopardize the network’s integrity, as is already happening.
The exchange claimed to have started accepting withdrawals of Bitcoin as of the time of writing.
The temporary suspension of Bitcoin withdrawals by Binance is not a new event. The site had temporarily “paused Bitcoin withdrawals due to a stuck transaction causing a backlog,” tweeted Changpeng Zhou, the founder, and CEO of Binance, in June of last year.