Binance Pauses Bitcoin Withdrawals, Blaming “Congestion”

Binance, one of the world’s largest cryptocurrency exchanges, temporarily paused Bitcoin withdrawals on its platform on Sunday. The exchange blamed the network congestion issues impacting Bitcoin’s network, which resulted in a backlog of Bitcoin transactions and a spike in transaction fees. As of Sunday afternoon, the total number of unconfirmed Bitcoin transactions in the network totaled around 395,000. This is a significant increase compared to the 56,500 unconfirmed transactions reported on April 26.

Due to this backlog, transaction fees on Bitcoin have skyrocketed, reaching their highest levels in almost two years on Friday, averaging $9.62 per transaction, according to data from YCharts. While they dropped slightly on Saturday to around $8.84 per transaction, they still represent over a 500% increase compared to six months ago when Bitcoin transactions averaged around $1.45.

The congestion and high transaction fees coincide with a steep rise in the number of inscriptions made through Ordinals, as people use the protocol for minting NFT-like assets on Bitcoin to create and trade fungible BRC-20 tokens. Started as an experiment in March by a pseudonymous on-chain data enthusiast named Domo, the market cap of BRC-20 tokens—which mirror ERC-20 tokens—has ballooned to $446 million, according to brc-20.io.

The surge in inscriptions has led to an increase in network congestion, and many are blaming the network issues on the demand for creating BRC-20 tokens. The high fees and congestion have also raised concerns about the scalability and efficiency of Bitcoin’s blockchain, leading many to question whether it is still a viable platform for trading and creating NFTs.

Binance’s decision to pause Bitcoin withdrawals caused widespread speculation on Crypto Twitter, with theories ranging from technical glitches to international political conspiracies. However, the exchange reported an hour later that Bitcoin withdrawals had resumed.

In contrast to Binance, crypto exchange OKX said Bitcoin deposit and withdrawal services were working fine, despite high transaction costs. It remains to be seen how other exchanges will handle the congestion and high fees on Bitcoin’s network, and whether they will take similar measures to Binance.