The roller coaster ride of the Bitcoin movement is on its way down again due to two of the most significant cryptocurrency exchanges crashing on Wednesday morning. Bitcoin was trading at a record high of $11,400 before dropping $2,200 to $9,200. The Bitcoin exchanges that crashed were Coinbase and Gemini, and in the end, users weren’t able to buy or sell the digital currency.
Bitcoin reaches all-time high before server problems
According to reports from the director of business operations at Coinbase, Dave Farmer, the reason for the crash was “all-time-high traffic” that the company didn’t have the right preparations in place. Why there was an increase in traffic isn’t said. Coinbase claims it has been involved in over $50 billion in cryptocurrency exchanges since 2012, getting in on the trend early.
Gemini, another cryptocurrency exchange affected was created by the Winklevoss twins (Who took Mark Zuckerburg and Facebook to court). Users who attempted to access Gemini received a “504 gateway time-out” message, not allowing its servers to respond to requests.
There were also users reporting issues with accounts on GDAX (a professional trading platform by Coinbase) and Bitstamp (A Bitcoin-based exchange in Luxembourg). Whether or not these problems are connected, or it’s just an odd coincidence no one knows yet.
Is bitcoin good or bad?
The bitcoin revolution is the cause of debate in many circles. Some see cryptocurrency as the future of currency while others view it as something with a lot of issues. Cryptocurrency requires its users to put trust in a computer system, which is different to users putting their faith in governments and banks. Computer systems, just like banks with humans involved, are never entirely trustworthy.
The sites affected are still having issues with performing exchanges and their speed is remaining slow. The drop was just hours after bitcoin hit a record high, before losing 20% in an hour and a half.
Not for everyone
“Bitcoin trading isn’t for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York, who does technical analysis on the cryptocurrency. “Corrections are fast and furious, and you can get run over just like in the movie.”
Unlike other currencies, Bitcoin has little oversight, and things can go wrong out of nowhere. Forget the passkey to your wallet, and your bitcoins are gone forever. The cryptocurrency has been called a bubble, and investors often don’t know what to do except hold on for a wild ride.
The future of the cryptocurrency is unknown, and a lot depends on its ability to hold value and not be volatile.