As more and more traders try to jump on the crypto bandwagon, exchanges are finding it increasingly hard to meet the increased demand.
Just as an indication of the speed with which demand is growing, Coinbase disclosed that they were getting 100,000 new customers per day. Such a rate of growth will be difficult for any company to effectively handle.
One of the problems that they do indeed face is strains on their server infrastructure and customer support. This was the case with Kraken over the past few weeks which has clearly frustrated a host of users as they have taken to social media to air their grievances.
This was indeed noticed by the team at Kraken. The CEO, Jesse Powell took to the front page of the internet to apologise for the issues.
Crypto Traders Ire
Kraken is one of the largest exchanges in the world and handles the bulk of the BTC/EUR volume. Hence, they face a great deal of the backlash from customers who expect to get their queries handled instantly.
Although there is work underway to eventually introduce cross chain atomic swaps and decentralised exchanges, the large centralised exchanges such as Kraken, Coinbase and Bitstamp are still the main entry point for a lot of traders.
These frustrations can also boil over from mere complaints to threats and lawsuits. The South Korean crypto exchange, BitHump discovered this the hard way when they threatened to take the company to court over a server crash. Traders claimed that the crash, short as it may have been, cost them millions.
As the Kraken CEO took to reddit to respond to the complaints, he cited “Jevon’s Paradox”. This is the theory that as technology advances demand for its resources, consumption increases with this growing demand.
According to Powell, they had a great plan ahead for how they would roll out a new platform. Yet, given the demand and strain on the resources, Powell claimed that:
Rather than be able to dedicate our efforts to the new platform, we’ve had to split efforts with water bailing and fire extinguishing
Despite the worries that some may have about the slow responses and occasional server load issue, Kraken has had an impeccable security record. Unlike a number of exchanges that have been a target for hackers like BitFinex and Bitstamp, they have never suffered a breach.
Mini Recruiting Drive
Powell took the opportunity of the increased interest in Kraken to push their recruiting efforts. He said that if people had the opportunity to join the team at Kraken, they could see their open positions.
These roles are mostly in compliance and customer support roles which are pivotal for the on boarding and KYC checks that need to be completed at Kraken before traders are verified.
Whether Jevon’s paradox is likely to hold out for a streamlined customer support function at Kraken remains to be determined. Perhaps the support staff headcount cannot increase at the same rate as Bitcoin adoption.
Although Kraken is taking positive steps to increase their efficiency and address the concerns, perhaps the larger issue is indeed the notion of a centralised exchange.
When you have a centralised exchange, you have a single point of failure. You have a organisation that remains in control of your access to the markets. If you keep your coins on an exchange, they “own” them as well.
Perhaps the power of the blockchain and decentralised exchanges will indeed be the best scaling solution that meets the hungry demand of cryptocurrency traders.
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