Coinbase Keeps On Crashing During Bitcoin Rallies And Here’s Why

Coinbase keeps on crashing during Bitcoin rallies as it makes it hard for exchanges to prepare for traffic spikes so let’s read more in today’s Coinbase news.

Crypto exchange Coinbase suffered a few outages during Bitcoin’s ongoing price rally with an increase in user traffic and trading activity results are putting a lot of pressure on the servers. The trading platforms are having a hard time preparing for these spikes because of Bitcoin’s unpredictability according to the experts.

Over the past week, the price of BTC reached a new all-time high level of $40,000 before suffering one of its biggest drops in history which pushed the crypto trading sector into overdrive. During this time, Coinbase keeps on crashing and experiencing a series of outages. Larry Cermak pointed out that the exchange has been seeing record trading volumes in the past few days which doesn’t come as a surprise considering the rollercoaster of ups and downs on the market.

 “Coinbase recorded record daily volume yesterday of $9.56 billion. Just to illustrate how crazy that amount is, that’s more than the total volume for Q1 2019. Also larger than the total volume for January last year.”

Coinbase recorded record daily volume yesterday of $9.56 billion. Just to illustrate how crazy that amount is, that's more than the total volume for Q1 2019. Also larger than the total volume for January last year. pic.twitter.com/UvlJULyWmh

— Larry Cermak 🟨 (@lawmaster) January 12, 2021

The massive surge in traffic put plenty of load on the exchange which triggered a lot of issues. however, this is not the first Bitcoin rally and a corresponding traffic spike ever so what’s causing the issues for Coinbase and other exchanges as well? Bitcoin’s unpredictability seems to be the main problem here according to experts.  Michael O’Rourke who is the CEO of Web3 blockchain data ecosystem Pocket Network said that bigger companies try to strike a balance between the current demand for the servers’ power and the potential one so while there are ways to “surge-proof” yourself against traffic spike which is usually not viable financially:

 “It’s generally about the scalability of infrastructure and the need to scale things quickly. It doesn’t make sense for Coinbase to 10x their server costs by having servers sitting there for unknown spikes in demand. The rate at which people are refreshing to buy crypto is faster than the physics of being able to quickly spin up servers on [Amazon Web Services].”

Back in 2017, most of the ETH ecosystem relied on the blockchain service Infura which used Amazon Web Services’ servers but this centralization could possibly lead to an increase in costs of operation and create a point of failure as O’Rourke explained. O’Rourke noted:

 “They used to [have outages] when they were growing. It’s easier to have that cost when you have billions of dollars. They also control their spike cycles e.g. when Netflix launches a new hit show they can prepare ahead of time. In crypto, it’s anybody’s guess.”