Crypto exchange Binance has resumed Bitcoin withdrawals after a temporary pause, with transactions shown as successfully sent to users’ wallets. There still may be delays with the actual transaction verifications, however.
Binance twice paused Bitcoin withdrawals from its platform in the past 24 hours citing “a congestion issue,” inevitably leading to massive speculation of the exchange’s health on social media.
The exchange, the world’s largest in terms of trading volume, moved to address the issue, saying it adjusted its miner fees.
This is a learning opportunity for us and we’ll do our best to prevent this from happening again.
Thank you for your patience.
— Binance (@binance) May 8, 2023
The exchange also noted that it would continue to monitor on-chain activity, hinting that it was also exploring the use of Bitcoin’s Lightning Network to speed up withdrawal times.
“We’re looking to enable BTC Lightning network withdrawals for users within the next few months. The BTC Lightning network works just like any network; users can withdraw via the Lightning network from the Binance platform into their private wallets. More details will be shared by our team once they are available,” a Binance spokesperson told Decrypt.
Bitcoin mempool clogged
The pause on Bitcoin withdrawals from Binance occurred amid a drastic increase in unconfirmed transactions, with data from Timechaincalendar showing more than 420,000 pending transactions going back as many as 55 blocks at the time of this writing.
The Bitcoin mempool, short for “memory pool,” is a type of data structure used by the Bitcoin network to store unconfirmed transactions. When a Bitcoin user initiates a transaction, it is broadcast to the network and added to the mempool of each full node that receives it.
The mempool acts as a waiting room of sorts for transactions before they’re included in a block by a miner. Miners prioritize transactions with higher fees, so transactions with lower fees or larger sizes may be left in the mempool for a longer period.
One of the possible reasons for the latest surge in Bitcoin transaction fees, which are currently commanding 245 sat/vB, or $9.55, for low-priority transactions, according to mempool.space, is Bitcoin’s sizable backlog to Ordinals, a protocol used for minting NFT-like assets on Bitcoin.
Called inscriptions, the total number of Bitcoin-based digital assets surged past 4.6 million on Monday, according to data available at Dune Analytics.
To put that in perspective, just last week, Bitcoin Ordinals inscriptions totaled 2.5 million.
Binance outflows
Another point of concern for some users was the large Bitcoin outflows from the exchange. These, however, appear to be the movements of funds between Binance’s hot and cold wallets.
“A lot of people commenting about the huge Bitcoin outflows from Binance today. Two transactions of 117K and 40K Bitcoin respectively. In reality, these are Bitcoin sent to newly-created change addresses that belong to Binance. Effective outflows are most likely just 10,100 Bitcoin,” tweeted Julio Moreno, head of research at on-chain analytics platform CryptoQuant.
A lot of people commenting about the huge Bitcoin outflows from Binance today.
Two transactions of 117K and 40K Bitcoin respectively.
In reality, these are bitcoin sent to newly created change addresses that belong to Binance.
Effective outflows are most likely just 10,100… pic.twitter.com/c5z8WOshG6
— Julio Moreno (@jjcmoreno) May 7, 2023
Binance confirmed this too, saying that “this ‘outflow’ are actually movements between Binance hot and cold wallets due to the BTC address adjustments.”
The exchange has also referred to DefiLlama’s data “for accurate information” regarding its wallet movements.
Despite all reassurances, the price of Bitcoin nonetheless dropped to a week low of $27,790 on Monday morning.
The leading cryptocurrency changed hands at $27,955 at the time of writing, down 3% over the day, per CoinGecko.
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Source: https://decrypt.co/139276/binance-calls-bitcoin-withdrawal-pause-learning-opportunity
