In the wake of recent commotion and frenzy, Coinbase has issued a blog post plea. As nutty a year as bitcoin is having, one could make an argument the San Francisco-based cryptocurrency exchange is having an even crazier one: crashes, IRS threats, tens of thousands of new user requests a day, entering the top 500 websites in the world, and, for one glorious evening, becoming the most downloaded application in Apple’s online store. However, its Gdax institutional platform went down when bitcoin was reportedly trading at 19,500 USD, causing widespread panic at the worst time possible.
Coinbase, “Please Invest Responsibly”
Titled “ An important message from the Coinbase team,” the exchange wishes to begin on a positive note. It “couldn’t be more excited by the explosion of interest in digital currencies.” With success, however, comes the ability to manage success as “it does create extreme volatility and stress on our systems.”
The trading days of 6-7 December 2017 will be remembered. At just about every hour, new trading prices of bitcoin reached all-time highs: $3,000, 14,000, 15,000, 16,000… until reports touted a high of over 19,000, and then retracement. Gdax fell, but so did Kraken, and even stalwart cold storage wallet Trezor issued apologies; Bitpay also hiccuped.
“We have increased the size of our support team by 640% and launched phone support,” Coinbase assured. “We have also invested heavily in our infrastructure and have increased the number of transactions we are processing during peak hours by over 40x.”
Bitcoin jumped $3,000 on 7 December, causing service to the exchange’s customers to fail at even the ability to log in to accounts. It was a repeat of just a few weeks back when bitcoin hit $11,000. The problems are frustrating customers, but they also raised eyebrows on Wall Street which is watching Gdax and others approaching Sunday’s future market debut.
Services May Become Degraded
“There may be downtime which can impact your ability to trade,” the exchange’s CEO Brian Armstrong warned. He “wanted to remind customers that access to Coinbase services may become degraded or unavailable during times of significant volatility or volume. This could result in the inability to buy or sell for periods of time,” he wrote, encouraging customers to read its User Agreement.
The six-year-old exchange now boasts over 13 million users.
In an effort to urge investors to be more proactive, it reminded cryptos “are volatile and the prices can go up and down. Due to the rapidly changing price of digital currencies, some customers may not have sell limits that are sufficient relative to the value of total digital currency they are storing” on the exchange. The note ends with some fairly basic security precautions and the usual recommitment to do better next time.
Not to be outdone in the exchange-warning game, Bitmex CEO Arthur Hayes was recently interviewed by Alice Lloyd George. Asked about volatility and the introduction of futures in coming days and weeks, “Initially, because of the way these contracts are structured, they will actually increase the volatility of Bitcoin,” he said. Mr. Hayes then detailed a scenario whereby futures, which typically stop trading over weekends, are usurped by physical trading, underlying trading, causing potential price confusion.
Ultimately, he explained, “People have been lulled into complacency with a market that keeps going up every day. They don’t understand that this is an extremely volatile asset. It’s not constrained by national borders,” he said.
Tell us what you think about the latest exchange warnings in the comments below.
Images courtesy of Pixabay, Coinbase.
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Source : Bitcoin