NOTE: I’m not a financial or legal advisor. I just have a passion for software technologies and believe in Blockchain’s future. However, I definitely don’t recommend you putting all your life savings in Bitcoin or any other cryptocurrencies.
What a day for Bitcoin. Price went down. Some can’t sell their coins. Definitely a stressful one for all those with Bitcoin wealth.
What’s Bitcoin Again?
Bitcoin is a form of digital currency that was created in 2009 by Satoshi Nakamoto. Bitcoin is created and held electronically with decentralized control. Transactions are made with no middleman intervention. This means that money is moved around the network without the participation of the financial institutions. It’s the first example of a growing category of money known as cryptocurrency implemented using blockchain technology. Bitcoin adoption is on the rise as more merchants are beginning to accept them.
Then, what is Coinbase?
Coinbase is an online cryptocurrency exchange. In simple terms, it is an online platform for buying, selling, transferring, and storing digital currency. It is probably the easiest way to swipe your credit card online and convert your dollars to digital currency into and out of their local currency.
So, What Happened?
Bitcoin’s hit major panic today. The price of Bitcoin fell from a high of nearly $20,000 last week to as low as $11,000 today. It is pretty scary especially for those who have their life savings in Bitcoin and other Crytpos. For those who leverage Coinbase for their hosted wallet and crypto exchanges suffered from a full halt on trading on the platform today. It was the second time this week the site was unavailable. Earlier this week on Wednesday, “all-time-high traffic” that contributed to system outages. These outages caused users to be locked out of their accounts.
Here are the updates posted on Coinbase:
Update - Buys and sells were temporarily unavailable earlier today due to site stability. High volume caused slow performance in one of our databases, and GDAX temporarily entered post-only mode due to availability issues with its REST API (in accordance with its Trading Rules). We have made several improvements and continue to monitor for stability.
Update - Buys and sells are currently operational. They were temporarily unavailable during these periods: 8:04 - 9:06 a.m. PST 9:35 - 10:26 a.m. PST
Monitoring - Due to today’s high traffic, buys and sells may be intermittently offline. We’re working on restoring full availability as soon as possible.
For more of these status updates check their status page.
It’s difficult to find authorities who will weigh in on the legal protections, if any, that exist for users of cryptocurrency exchanges like Coinbase. This really stems from the lack of regulation in the crypto world. Cryptocurrency trading is relatively new when compared to other means of trading and there is little precedent for consumer protections. That being said it is not illegal (at the moment) for these exchanges to halt transactions.
Interestingly enough the SEC (U.S. Securities and Exchange Commission) issued an investor alert which basically warns that Bitcoin exchanges “may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware.”