Crypto exchange Binance has resumed Bitcoin withdrawals after a temporary pause due to network congestion, assuring customers that transactions have been sent to their wallets. Despite the resumption, delays in actual transaction verifications may still be experienced.
For background, Binance twice paused Bitcoin withdrawals from its platform within 24 hours, citing a congestion issue, which led to massive speculation of the exchange’s health on social media. The world’s largest exchange in terms of trading volume addressed the issue by adjusting miner fees and ensuring more diligence to prevent similar incidents in the future. Binance also mentioned monitoring on-chain activity and exploring the use of Bitcoin’s Lightning Network to speed up withdrawal times for its users within the next few months.
The withdrawal pause occurred amid a significant increase in unconfirmed transactions, with more than 420,000 pending transactions going back as many as 55 blocks. The Bitcoin mempool, a data structure storing unconfirmed transactions, has experienced lag times as miners prioritize transactions with higher fees. Thus, transactions with lower fees or larger sizes may take longer to be confirmed.
One possible reason for the current surge in Bitcoin transaction fees is the sizable backlog to Ordinals, a protocol for minting NFT-like assets on Bitcoin. The total number of Bitcoin-based digital assets, called inscriptions, surged past 4.6 million recently, an increase from 2.5 million just last week.
Moreover, concerns have risen over large Bitcoin outflows from Binance, which were in reality movements of funds between Binance’s hot and cold wallets. These adjustments were confirmed by Binance, who urged users to refer to DefiLlama’s data for accurate information regarding their wallet movements.
Despite reassurances, Bitcoin’s price dropped to a week low of $27,790 on Monday morning. At the time of writing, the leading cryptocurrency was trading at $27,955, down 3% over the day.
In summary, Binance’s withdrawal pause highlighted the ongoing challenges tied to network congestion and unconfirmed transactions. The exchange’s exploration of the Lightning Network could potentially alleviate such issues in the future. Meanwhile, the market awaits the impact of these developments on Bitcoin’s already volatile prices.