For the last few days, it seems that every time the world blinks, Bitcoin tacks another $1000 onto its token valuation. Just a couple of days ago, BTC holders all over the world were rejoicing when the cryptocurrency surpassed the $12,000 mark. Today, BTC’s valuation reached above $17,000 – wait, no. $18,000.
What’s more, the coin will likely continue its rise at least until Monday, December 11, in anticipation of the launch of Bitcoin futures trading on CBOE; CME will offer Bitcoin futures starting on December 18. (NASDAQ has also announced plans to offer Bitcoin futures, but the exact timeline is unknown.) After that, it’s even more likely that the currency will continue to explode.
The insane rise of cryptocurrency over the last few days has led to a sudden surge in mainstream news coverage. People who had never heard of the cryptocurrency a couple of weeks ago are suddenly very interested in buying it. As such, cryptocurrency exchanges – particularly the ones that support the use of fiat to buy Bitcoin – are experiencing unprecedented demand.
Outages Left and Right
The Coinbase app, which has become one of the most popular ways to buy Bitcoin, Ethereum, and Litecoin experienced outages yesterday due to “record high traffic.” Users experienced “slow performance”; some were unable to access their accounts at all.
We are currently experiencing record high traffic. This is resulting in some customers having slow performance or issues logging into their https://t.co/bCG11KveHS accounts. We are actively working to resolve this as quickly as possible.
— Coinbase (@coinbase) December 7, 2017
Expressing frustration, one Reddit user said that Coinbase was like a “childlock for adults which forces you to HODL” (HODL is the term for holding onto your coins in the Bitcoin community.) Forced HODLing can be a mixed blessing; this particular user wished to sell their coins at CAD$19,000, but watched them fall back to CAD$15,000 before selling was possible. Other users who wanted to sell their coins at lower prices have been forced to hold through increases in BTC valuation.
Bitfinex faced similar service outages for similar reasons, although they cited the high amount of traffic on their platform to “a mixture of huge real customer demand for deposits & withdrawals” and a “DDoS [attack] in the form of malicious microdeposits and withdrawals (a heavily funded attack.)” If the statement is true, this is the second DDoS attack that Bitfinex has experienced within the last two weeks.
Bitfinex explained that some of the withdrawals that have taken longer than average to be confirmed have needed to be manually checked in order to be re-sent or resolved. The exchange, which is the largest cryptocurrency exchange in the world, cited its large customer base as the reason that it took “longer to manually reprocess the failed withdrawals.”
Amidst High Traffic, Hacks and Leaks
Some users on the Slovenian-based NiceHash mining exchange may have gotten a nasty surprise on Wednesday. According to a report from the Guardian, $64 million worth of BTC was stolen from the exchange by hackers during an outage. The exchange suspended operations on Thursday in an attempt to figure out exactly what happened. Law enforcement officials have been involved, and the exchange has told users to reset their passwords.
Another security vulnerability was exposed in a major exchange when it was revealed that Bittrex has been accidentally leaking photos and scans of users’ passports, which are required as a form of identification.
According to a report from CoinTelegraph, the images were exposed through Know Your Customer emails from Bittrex’s customer support system. Users applying for accounts who had their identity verification materials rejected were reportedly sent back an email with their own rejected materials along with the rejected materials belonging to several other users.
At the time of press, Bittrex had not commented on the allegations. CoinTelegraph reported that despite user frustration, the exchange has been silent on social media since November 30.
Despite the presence of a logical explanation for the widespread outages, there has been some speculation that major exchanges purposely shut down operations at times of high traffic to manipulate markets in their own favor.
The theory goes that by denying users access to their coins, prices will be driven down artificially. When users regain access to their coins, many of them will panic at the falling prices and sell, causing the price to drop even further. The discounted coins are then bought up by exchange insiders, and the price resumes its climb.
While these kinds of theories are certainly not at the forefront of many discussions in the crypto community, their presence is a reflection of the general distrust that many have for the world’s larger exchanges. Bitfinex has recently been under fire for its close connections with Tether following a hack during which $31 million in Tether dollars were stolen from the exchange several weeks ago.
Additionally, Coinbase is slowly working on rebuilding a reputation that has long been plagued by user reports of locked accounts and unresponsive support.A Rocket to the Moon
It seems that between the anticipation of the launch of Bitcoin futures trading and the sudden boost in pop cultural clout that Bitcoin has received, the coin could continue to exceed expectations through the end of 2018. In mid-November, billionaire Mike Novogratz predicted that Bitcoin, which was worth around $8,100 at the time, would end the year at $10,000.
Now, he says that the value of a single Bitcoin could “easily” reach $40,000 by late 2018. Even with some steep corrections – which have to happen sometime – at the rate that we’re going, that $40,000 benchmark may come a lot sooner than expected.