Major breakdown at Coinbase! Is the crypto exchange paralyzed by Bitcoin frenzy?

As Bitcoin reaches historical records in 2024, the crypto exchange Coinbase suffers a massive outage, plunging millions of users into chaos. An analysis of an event symptomatic of the structural limitations of the crypto sector, incapable of handling the explosion in demand.

Coinbase Paralyzed! The Bitcoin Frenzy Continues

On February 28, 2024, just as Bitcoin flirts with $60,000, surpassing its 2021 record, Coinbase, the largest crypto exchange, experiences a blackout. For several hours, the website and mobile apps are out of service. 

It’s impossible to buy, sell, or exchange Bitcoin for millions of users caught off guard. The outage occurs amidst speculative frenzy, as the price of the star cryptocurrency soars due to unprecedented demand. 

Some see it as a forewarning of the structural incapacity of the sector to absorb a massive influx of new entrants. Others outright accuse Coinbase of orchestrating this chaos deliberately to serve the interests of its investors.

The Limits of an Immature Infrastructure

For Coinbase, this unprecedented outage was due to a sudden “extreme volume of traffic,” which brought its servers to their knees. The company defends itself against any manipulation, citing a mere technical problem. 

But this incident reveals the vulnerabilities of an ecosystem still in its infancy, unable to handle exceptional spikes in activity. While Bitcoin’s popularity continues to rise, the robustness of crypto exchange platforms becomes a critical issue.

Some of Coinbase’s competitors, such as Binance, take the opportunity to mock the American exchange’s amateurishness and to boast about the reliability of their own services. Yet it’s the entire crypto sector that seems immature in the face of the influx of new users drawn by the digital gold rush.

What About Crypto Decentralization?

Beyond technical failures, this episode also reveals the limits of the dominant model of centralized platforms like Coinbase. In theory, one of the cornerstones of cryptocurrencies is precisely their decentralized nature, without the need for a trusted third party.

But in reality, most users go through private intermediaries that have complete control over network access. This increased centralization poses serious challenges in terms of sovereignty and resilience of the crypto ecosystem.

In the long term, some experts believe that only a truly peer-to-peer model will enable Bitcoin and altcoins to scale and withstand major shocks. However, this paradigm still seems distant, as giants like Coinbase today overwhelmingly dominate the sector.

The incident at Coinbase clearly illustrates the growth challenges faced by the crypto ecosystem, a victim of its own success. As enthusiasm for Bitcoin continues to grow, the robustness of essential infrastructures is clearly called into question.