Cryptocurrency exchange Binance has paused Bitcoin (BTC) withdrawals for the second time in 24 hours as the Bitcoin network is facing severe transaction congestion. The two-hour pause of bitcoin withdrawals, as announced by Binance, is said to be due to the unprecedented rise in the number of unconfirmed transactions. Although the bitcoin withdrawal feature was restored briefly, it was paused again shortly afterward with the amount of unconfirmed transactions far greater than the number when the initial halt occurred (400,000 approximatively).

The reaction of the market to the news of the blockchain congestion was marked by a decrease in the price of Bitcoin by 2.6%. As of press time, CoinGecko data shows Binance no longer amongst the top 10 exchanges for bitcoin trading pair and has significantly slid down its position in the leading Bitcoin trading volume.

This is not the first time Binance had to stop operations due to immense blockchain congestion. In 2017, Binance suffered from a major technical issue due to blockchain congestion when the amount of unconfirmed transactions briefly exceeded a staggering 250k. The incident raised questions about Binance efficiency in dealing with similar technical problems, considering that the exchange has been in the market since then.

It is currently unknown when Binance will resume Bitcoin withdrawals although the company is doing its best to manage the situation and deliver the best user experience. This incident has raised questions about the fundamental system architecture of Bitcoin which is based on proof-of-work(PoW) consensus as it becomes a major obstacle for its further adoption. PoW allows miners to confirm transactions and generate new blocks with their computing power. In a time when transactions have to be completed quickly and efficiently with low fees, Bitcoin and other similar blockchain networks need an overhaul of their consensus systems.



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