- >Coinbase Keeps Going Down. Is It Time To Try Other Exchanges?
Coinbase Keeps Going Down. Is It Time To Try Other Exchanges?
Coinbase has a serious problem. It may be one of the biggest and most popular cryptocurrency exchanges in the world, but it has developed a rather unfortunate tendency of going down just when its users need it to stay up. Its most recent outage (as of writing) occurred when the price of bitcoin dipped by over 10%, falling from $18,800 to $16,700 in a matter of hours.
Simon Chandler | Nov 30, 2020
For Coinbase’s 35 million users, this is by now an all-too familiar pattern: when the price of bitcoin (or other cryptocurrencies) rises or falls substantially, a buying-selling rush occurs which Coinbase apparently can’t handle. At least not without suffering outages that prevent a portion of its users from trading in or out at just the right moment.
This has been happening all year, during a period when the cryptocurrency market has been heating up. So what are cryptocurrency holders and Coinbase users to do? Short of complaining en masse to Coinbase until it makes significant overhauls, they can also consider trading with one of the many other reputable, regulated and user-friendly exchanges in various parts of the world. This would at least spread crypto’s user base in such a way that no exchange was overwhelmed with too many customers.
Coinbase Outages Are Correlated With Bitcoin Price Swings
In case you aren’t aware of the sheer scale and frequency of Coinbase’s issues, here’s a rundown of every outage it has suffered this year.
Technical issues reported to Downdetector (times in GMT). Source: Downdetector.co.uk
On November 26, amid a technical correction, Coinbase admitted that its main platform and also Coinbase Pro were both experiencing “connectivity issues.”
Just over a week earlier, on November 16, something very similar happened. Except this time, it happened during an upswing, preventing people from buying bitcoin and other cryptocurrencies just before prices became too high.
There were “connectivity issues” on November 11, “feed issues” affecting Coinbase Pro on October 27, and also “market data” issues (also affecting Coinbase Pro) on October 20.
Coinbase experienced “intermittent connectivity issues” on August 18, around the time the bitcoin price briefly crossed the $12,000 threshold. It had similar problems on July 16.
On June 1, it suffered more serious “connectivity issues.” It admitted on its website that, due to bitcoin passing $10,000, its platform “experienced a 5x traffic spike over 4 minutes. Our autoscaling was unable to keep pace with this dramatic increase in traffic.”
Much the same happened only a few days earlier, when on May 28, Coinbase reported “connectivity issues” once again, amid a rising bitcoin price. May was a particularly busy month for Coinbase, since May 9 also witnessed another surge in connectivity issues. Needless to say, users weren’t entirely pleased.
On April 29, the price of bitcoin surged from about $7,700 to $8,700. And guess what, Coinbase went down (yet again) on that day as well.
To cap this review off, Coinbase also reported connectivity or “intermittent” issues on February 20, February 5, and January 24. This makes for a total of 13 reported outages in 2020 (so far), a record that certainly isn’t enviable, and one that may have cost its users a not insubstantial sum of money.
To be fair, other exchanges experience outages and connectivity issues. Binance has been down on a handful of occasions this year, as have BitMex, Bitfinex and Kraken. However, it is Coinbase that is by far and away the leader when it comes to the number of reported outages.
This may possibly be the result of it being more transparent about its service than other exchanges. However, it likely stems mostly from it having more users than other exchanges (even Binance reports only 15 million users), and from not doing enough to accommodate these users during periods of peak activity.
Yes, Coinbase may point to unusual “5x traffic spikes” as one of the reasons why it goes down, but as rare as they might be, these spikes are often where the difference between a big or small profit (or loss) is made. Buyers want to buy crypto just as it hits rock bottom, while sellers want to cash out before they lose money. If they’re prevented from doing this, the whole enterprise of cryptocurrency trading becomes a bit pointless.
Coinbase has recently indicated that it’s “working hard” to increase its capacity, but until it proves itself capable of handling a market rush, some traders will remain skeptical.
Conversely, some commentators have suggested that Coinbase going down during swings is actually good for crypto, in that it helps to stablize prices.
Spread Your Bets
But as rash as new investors may arguably be, they have every right to sell or buy during a swing, so there’s no way Coinbase’s failures can be justified on this basis. And without Coinbase doing much to improve its performance as of its latest outage (November 26), it becomes incumbent on its users to consider trying other exchanges.
Coinbase isn’t the only regulated, popular or well-regarded crypto-exchange in the world. As our article on the best crypto-exchanges shows, there are numerous others which are not only regulated in the United States, EU and other areas, but also provide a similarly user-friendly experience and — in many cases — lower fees.
Coinbase may be the most recognized and reputable exchange at the moment, but by spreading their holdings to other exchanges, cryptocurrency traders may find that they end up getting burnt less during periods of peak activity.
For example, by opening an account with a smaller exchange, traders may be able to buy bitcoin cheaply during downturns, at times when Coinbase may be down. And by doing this, they may find that a simple interface isn’t the be-all and end-all of cryptocurrency exchanges.