Cryptocurrency exchanges struggle with influx of new users

Cryptocurrency exchanges struggle with influx of new users

South Africa, Uncategorized

2017 has been a bumper year for cryptocurrency, and from January to December there has been a massive surge in price, and along with it, every aspect of corresponding activity on cryptocurrency exchanges has increased dramatically.

Bitcoin increase in 2017

Bitcoin started the year at around $1000 and is currently around $17725, which is just over 1600% increase in price this year alone. The increase in price has created a frenzy in crypto-land, with many alt coins also showing massive gains in price.

Cryptocurrency exchanges are struggling

Exchanges in South Africa and around the world have struggled with the influx of new users that has grown exponentially over the last 12 months. The amazing growth of the industry and crypto-economy has shown no sign of slowing down and 2017 has been the busiest yet for most exchanges. Bitcoin and Ethereum have both enjoyed a lot of media coverage and this has fueled the hype. I cant tell you how many people I know who are suddenly bitcoin traders, or into cryptocurrency in some way.

The influx of users after the latest major rise in price has had the side effect of creating network congestion and exchange backlogs. Recently users have had to experience delays on exchanges with verifying of accounts, answering emails and social media questions, responding to customer support tickets and most importantly crediting of deposits and authorising withdrawals.

Since November exchanges around the world have really been struggling, the biggest players in the industry took to social media to keep users updated:

The problems continued for days, with customers experiencing slow performance and problems logging into their accounts. Coinbase provided a status update on what was going on

Coinbase even went so far as to take their site offline in order to upgrade their infrastructure to be able to handle more traffic.

Bitstamp had also been affected by the increase in activity as seen by the tweet they posted below

A week later they were still updating twitter about the performance issues, while customers were freaking out about allocation of funds to their accounts.

Even Bittrex exchange was not immune to the issues. Rami from Bittrex posted this update before taking the exchange offline for updates:

A few days later and Bittrex was still experiencing massive influx of new users and is not able to handle the load. The official twitter account posted the following message after they turned off user registrations

Another major exchange hit with problems have been Bitfinex which was taken down multiple times

Other service providers have also come out publicly to provide information to customers because of the degraded services and the customer complaints on social  media that were complaining

Local South African exchanges Luno and iceCUBED have been taking strain too, and have had delays with verifications, deposits and withdrawals, and support ticket responses.  The affect that the increase in new users has had is extreme.

South Africans took to twitter to voice their opinion about the service at Luno and iceCUBED, not realising that this is not specific to South Africa, or our exchanges. As you can see by all the major service providers above, this is global.

Luno:

iceCUBED exchange:

Some users even tried to get 3rd party support for their transactions, where the high volume was again shown as a reason for delays.

iceCUBED exchange went a step further, to halt new user registrations in an attempt to slow down support tickets and get a grip on the outstanding issues.

UPDATE: Gareth Grobler from iceCUBED reached out to explain further

We have taken the decision to halt registrations temporarily for multiple reasons. First and foremost is the efficient support of our current clients and due to the surge in popularity of crypto currencies world wide, all systems are taking quite a lot of strain. Scaling the technical infrastructure is not as difficult as we have the mechanics in place to do so. KYC and AML processes are a core component of what we do and requires human resource. Adding these resources responsibly and ethically, is simply not possible at the pace at which the crypto currency industry is growing. We would rather see new service providers enter the growing market, and sustain our trusted reputation by providing the best service possible to our current user base.

We have also had a surge in users who are swept up in the crypto currency craze and are risking funds which they cannot afford to lose. Part of our processes include being socially responsible and we simply cannot allow users on our platform that clearly have a desperate need for financial management and education. This is a highly volatile industry which could lead to incredible gains, but equally has the possibility of taking an “investment” down to zero.

Why cant exchanges just hire more staff to deal with the influx?

Exchanges have had to deal with these issues on multiple levels, outside of the physical infrastructure, it is primarily by hiring and training more staff at a pace to attempt to keep up with the ever increasing demand. Internal procedures have had to be re-evaluated and streamlined in order to scale up with the influx of customer activity.

While the increase in users has been exponential, exchanges are not able to grow at the same rate, and have to be conservative in their approach to company growth, as if prices were go the other way, it would not be feasible to continue to employ unnecessary staff who would wind up out of work as fast as they came into the company.

The safety of customer funds is of the utmost importance, and staff not only have to have the highest integrity, but also need to possess many skills. Crypto exchange support staff also need to have patience, knowledge of the industry and ecosystem, have problem solving ability, be friendly and courteous, and be able to follow strict policy and procedures. Staff of this high caliber are hard to come by, and growth of staff is more organic than exponential.

A major delay in processing bank to bank transactions is the amount of Fraud , Anti Money Laundering, Identity theft, and suspicious transaction checks exchanges perform. A bank transfer to your friend or family member does not go through the same checks and can be instant if it is the same bank. Since exchanges could be liable if they allow a transactions by suspicious people, every transaction is scrutinised before funds are allocated.

The exponential influx of customers vs the organic influx of new staff, has taken a toll on the user experience at some exchanges in South Africa and around the world. Customers that have experienced delays have become increasingly frustrated, and have been voicing their opinion on social media.

Some users locally assumed their support issue was a problem specific to one exchange or the other, and even threatened to switch exchanges unless their support tickets were dealt with immediately. Some affected users claimed to be ‘finished’ with certain exchanges as the other is much better, not understanding that all exchanges are feeling the pressure.

This approach of switching exchanges is not really drastic, and should actually be considered as a viable option. Why limit yourself to one exchange? If it is possible to get the same product elsewhere, it is a great idea to be listed on any and all exchanges that you can. The product that you need is the cryptocurrency, and if you can get it at more than one place, why not spread the risk?

Register on multiple exchanges to make sure you have options if things are going south. Chop and change at your leisure and take advantage of the price difference and the strong points of each exchange.

Spread your risk

Being a user on multiple exchanges gives you options and can ease your frustration if you are having issues with your current exchange. Every exchange has advantages and disadvantages over each other, and having the option to choose which one to use when you want to us it, is better than having no option at all. The other thing to consider is to spread your risk, having everything in one place can be more risky, as the saying goes, ‘dont put all your eggs into one basket’.

Being on more than one exchange also opens up the opportunity to do arbitrage trading, where you can exploit the price difference between exchange, keeping the difference in price after fees as your profit.

Getting Support on iceCUBED and Luno exchanges

Are you getting frustrated with service on iceCUBED or Luno? If you need support, do not attempt to directly email the exchange. Use the support ticket system which keeps all customer correspondence in one place, and keeps customer support queries in order. The exchange can check all your previous historical support queries in one place, and can help you faster in the future.

Once you have a support ticket, you are emailed status updates of the ticket, and can reply to that email or log onto the support desk to answer tickets or attach documents.

When you submit a support request, do not submit more than one ticket unless it is for a completely different issue. Submitting multiple tickets will mean slower response times, and or tickets will get merged into one. When tickets are merged, they are sent to the back of the queue like a new ticket, so it will take longer.

iceCUBED support

helpdesk: help.ice3.com
twitter: twitter.com/ICE3X
facebook: www.facebook.com/ICE3X
website: www.ice3x.com
Join iceCUBED: Follow our step by step instructions

Luno support

helpdesk: www.luno.com/help/en/tickets/new
twitter: twitter.com/lunomoney
facebook: www.facebook.com/luno
website: www.luno.com
Join Luno: Follow our step by step instructions

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