Binance has been offline since the evening of Wednesday, February 7. While some people have responded negatively on Twitter and other social media, speculating that there was a hack and that their coins were lost, the Binance team, including its founder CZ (born Changpeng Zhao) have posted numerous tweets detailing the reasons behind the shutdown. The first announcement came from the main Binance Twitter account: “A system maintenance is in progress, some users may experience a temporary decrease in exchange performance while this in underway.Thank you for your understanding.”
This announcement resulted in a great deal of negative feedback from the community. People compared the company to a “fried chicken shop” and demanded compensation for lost money due to the inability to trade through the BTC correction. Others suggested that Binance was hacked, and that unscheduled maintenance was unacceptable. While jokes and words of anger flew back and forth, the primary complaint was that there was no prior notice of a systems update, and that no notifications were sent to API customers who no doubt lost time troubleshooting a problem that didn’t exist on their end, debugging code that wasn’t broken.
Binance is essentially in their first year of business, and their terms of service are very clear about no liability for losses due to technology problems. The cryptocurrency trading industry is also very new, and any investor with some common sense should understand the risks, including volatility and technical problems. We can chalk these problems with Binance up to “growing pains” but the community has sent Binance a very loud, very clear message: fix your exchange before you lose your customers to other exchanges. Put systems in place to prevent unexpected outages. And if you need to make updates, give the community a reasonable amount of notice so that they can settle their trades. At this point, it might not be a bad idea for the company to hire a customer experience expert to help them with this part of their business.
At present, Binance is among the biggest exchanges, partly because of its broad selection of coins, and the addition of new ones on a weekly basis. But, they’re not the only game in town. Recently, Bittrex announced that they would start accepting fiat transactions soon. If that happens, and Binance continues to have outages, then the logical conclusion will be a significant loss in market share for the company.
We still believe in Binance. They’ve got a great platform and a brilliant team. CZ is a mover and a shaker, building the Binance exchange so that it could theoretically handle 1.4 million transactions per second. The biggest weakness with this company appears to be in its overall management. While they were transparent and quick about announcing issues with the network as they happened, they failed once again to anticipate such problems ahead of time. Putting systems in place to give users more advance notice would be a good first step in improving the overall customer experience. It’s a relatively easy fix and would foster loyalty among the many crypto traders on the exchange.