Bitcoin exchange warns customers of system collapse if prices crash

 
Courtney Goldsmith
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Bitcoin Continues To See Unprecedented Growth
Bitcoin is known for its volatile price (Source: Getty)

A leading bitcoin exchange has warned that customers may be unable to get their money out quickly in the event of a crash in the cryptocurrency's price.

Writing in a blog post last week, Coinbase's co-founder and chief executive Brian Armstrong, said despite "sizeable and ongoing" increases in the firm's technical infrastructure and engineering staff, access to Coinbase services could become "degraded or unavailable during times of significant volatility or volume".

"This could result in the inability to buy or sell for period of time," he said.

Armstrong added that there would be restrictions on how much customers could sell, or sell limits, to "protect client accounts and assets".

The comments came amid a week of huge swings in bitcoin's price. The digital currency climbed over $17,000 early Friday morning, but today its price dropped to as low as $13,150 a coin ahead of the launch of Cboe Global Markets' bitcoin futures contracts later tonight.

The Cboe bitcoin futures contract will use the ticker XBT and will equal one bitcoin. It will launch at 5pm in Chicago, or 11pm GMT, while CME Group's bitcoin futures contracts will go live on 18 December.

The launch of bitcoin futures on established exchanges offers an opportunity for bitcoin to break through even more milestones as new investors pour in, but analysts have also warned that it could lead to short selling.

Bitcoin's market capitalisation rose above $300bn for the first time earlier this week when its price rocketed to an all-time high of just over $17,000.

Many analysts have warned that bitcoin represents an unsustainable bubble, though no one is quite sure when it will burst. Saxo Bank's annual list of "outrageous" predictions include a forecast that bitcoin could reach $60,000 before it crashes.

Security concerns pose another issue for bitcoin, as a hack last week proved.

Cryptocurrency mining marketplace NiceHash was hit by a security breach in which potentially millions of dollars worth of bitcoin were stolen.

Yesterday, the Telegraph reported that Chris Ensor, the deputy director for cyber skills and growth at the National Cyber Security Centre said it was investigating potential security risks associated with bitcoin.

The Treasury is also looking to crack down on bitcoin by expanding European Union anti-money-laundering rules that force traders to disclose their identities and report suspicious activity to include cryptocurrencies.

Read more: Bitcoin just went back below $15,000

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