Cryptocurrency exchanges struggle with influx of new users

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 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:

Wow, that was scary. Took me 50hrs to withdraw my BTC. Took 5 attempts. There is a lot of FUD going around, but I TRULY suspect these are just growing pains because Coinbase in the #1 place in the USA to purchase Bitcoin. Don't spread fear & fiction – hurts the industry!

— Crypto John (@CryptoJohn69) December 2, 2017

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

We are currently experiencing record high traffic. This is resulting in some customers having slow performance or issues logging into their https://t.co/bCG11KveHS accounts. We are actively working to resolve this as quickly as possible.

— Coinbase (@coinbase) December 7, 2017

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

We are performing scheduled maintenance tonight at 10pm Pacific Time.

Coinbase services will be offline for 1 hour.

This will significantly increase the amount of traffic we can handle and help to prevent slow performance and login issues during large traffic surges.

— Coinbase (@coinbase) December 12, 2017

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

We are investigating our performance issues and working to resume operations as soon as possible.

— Bitstamp (@Bitstamp) November 29, 2017

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

are you alive ???? If you die, I am glad of attend your funeral anyway I've deposited 30265 usd on 29 th November to you with international wire transfer, however its been 16 days, the funds are still not available, my ticket number 230193 where is my money??? I m freaking out

— Veysel (@kayaaveysel) December 13, 2017

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

Due to unprecedented user growth and request load, we are currently performing upgrades on our back-end system. We are attempting to minimize trading impact but we expect short rolling outages on all markets. @BittrexExchange 1/2

— Rami (@ramikawach) November 30, 2017

Downtime should be limited to 20 minutes per market but can be up to one hour. All wallets will be available for deposits and withdrawals. If status changes, we'll update you. @BittrexExchange 2/2

— Rami (@ramikawach) November 30, 2017

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

We have turned off user registration for a DB upgrade due to a large spike in new user sign ups.

— Bittrex (@BittrexExchange) December 14, 2017

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

Platform is currently under heavy load and we are working to bring it back online.

— Bitfinex (@bitfinex) December 4, 2017

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

Over the past week the Bitcoin network has experienced record high traffic resulting in longer confirmation times and higher fees for transactions. Stay in the know by visiting https://t.co/Q4NnU208EY.

— Blockchain Support (@AskBlockchain) December 8, 2017

Due to increased interest in TREZOR and the associated heightened traffic on our support channel, we are currently unable to process all inquiries within the standard 24-hour deadline. Please accept our apologies for the delays. We will tend to your query as soon as possible.

— TREZOR (@TREZOR) December 14, 2017

Our infrastructure is still having some major disruptions. We are adding servers as fast as we can, and our engineering team is working around the clock. FUNDS STAY SAFE. You can use https://t.co/UvkE5FZPoR for ETH and Electrum/Mycelium for BTC

— Ledger (@LedgerHQ) December 14, 2017

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:

We're really sorry for the delay in verifying your account. We're experiencing a huge influx of signups and are trying very hard to make sure we get all our users verified as soon as possible.

— Luno (@lunomoney) December 14, 2017

Sorry for the delay on this, when we are experiencing high ticket volumes, responses can take a little longer than usual. Thanks for your patience.

— Luno (@lunomoney) December 14, 2017

We are still experiencing extreme market volatility. Some customers may experience performance issues. We're really sorry about this. We'll keep you updated with the progress on https://t.co/L0cKVVwlhk

— Luno (@lunomoney) November 30, 2017

Please note we are aware of issues related to price volatility, network congestion (and high transaction fees), ETH Instant Buy/Sell, bank delays in Nigeria, and verification delays. We are working on these issues, where we can. ?
Follow the progress at: https://t.co/E1QD2iYbk4

— Luno (@lunomoney) December 13, 2017

iceCUBED exchange:

Extreme volumes on support desk, we are working through tickets as fast as we can. Please allow at least 24-48 hours 4 FIAT deposits 2 clear. We can simply not RISK other users funds by crediting funds that reflect, but have not cleared in our accounts.{new gateway coming in JAN}

— iceCUBED Exchange (@ICE3X) December 8, 2017

Currently scaling platform to accept incredible surge! Some users experiencing 502 errors, should improve in the next 10 minutes

— iceCUBED Exchange (@ICE3X) December 14, 2017

We are not able to assist with deposits and withdrawals via social media. If your deposit does not reflect after after 72 hours. Please log a ticket https://t.co/CkVWQaGC8V (logging multiple tickets will cause further delays). We are doing our best to keep up with demand.

— iceCUBED Exchange (@ICE3X) December 13, 2017

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

I wish we could. Unfortunately, we can't access other exchanges systems and send for them. (If we could, that would be bad).
Most are dealing with super-high volume at the moment. Open a ticket, don't be rude, follow up (nicely) if you don't her back in a week.

— MyEtherWallet.com (@myetherwallet) December 14, 2017

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.

NEW USER REGISTRATIONS HAVE BEEN TEMPORARILY SUSPENDED

— iceCUBED Exchange (@ICE3X) December 14, 2017

It is not fair on current users waiting for verification. We cannot just expand the verification team and if prices go the other way people are out of work quicker than they got in. we need to have a balanced approach and use ethical approach

— iceCUBED Exchange (@ICE3X) December 14, 2017

We need to act responsibly and get all the backlog cleared before allowing new registrations. If you already have an account, and submitted your docs, we will verify you before we enable registrations again.

— iceCUBED Exchange (@ICE3X) December 14, 2017

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.

Go, ahead! Never had a problem with @ICE3X!, Great fast support with @FNBSA.
And the best is yout get to trade $BTC, $ETH, and $LTC!!!

— Block Regulator (@block_regulator) December 14, 2017

@ICE3X how can it be this whole week waiting to be verified. I cannot send my ETH to an ICO I'm interested in which was the reason for buy the ETH. @lunomoney worked much better for me. Luckily the rest of my money is sitting with them as this is not good service.

— Justin Vermeulen (@vamees) December 15, 2017

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.