Binance, one of the world's leading cryptocurrency exchanges, experienced significant technical issues on Sunday, May 7th. All Bitcoin (BTC) withdrawals were temporarily blocked, claiming congestion on the blockchain network. As a result, the exchange volumes exceeded $6 billion in just 24 hours. Although some people were concerned about potential losses, Binance's team assured its customers that their funds were safe, so panic was prevented.

To prevent similar occurrences in the future, Binance opted to increase its transfer fees and additionally considered using the Lightning Network to help improve the situation. It is possible that the competition in the blockchain space has driven the transaction fee growth, but it could also be the consequence of the application of Ordinals. This system utilizes blockchain technology to create non-fungible tokens (NFTs) for the first time and was introduced by Bitcoin developer Casey Rodarmor in early 2021.

Hayden Hughes, co-founder of the social trading platform comment was quick to point out how Ordinals contribute to the congestion on the Bitcoin network. He noted that these tokens increase the number of different transactions, which can lead to a rapid spike in its fees.

On the other hand, Colin Wu, a cryptocurrency writer, explained that the Bitcoin Taproot adoption rate reached a record high on Sunday. This was presented as an example of block sizes increasing, which is in line with what we can expect with the higher demand on these types of exchanges.

The outflows were further investigated by Julio Moreno, director of research at CryptoQuant, who noticed at least two transactions of 117,000 and 40,000 Bitcoin send from Binance. In fact, these tokens were sent to newly created addresses belonging to Binance and the effective outflows were estimated to be around 10,000 Bitcoin, significantly lower than the reported figure.

In conclusion, most of Binance's problems were quickly addressed over the course of the day and the user funds remain safe. For the time being, the Bitcoin transfer fees have been increased and the release of the Lightning Network is a promising option. Nonetheless, the Bitcoin Taproot adoption rate that has risen over the past few months is an important factor that cannot be overlooked and requires further exploration.



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