Update Oct. 20, 1:15 p.m. UTC: This article has been revised to incorporate insights from Dr. Max Li, founder and CEO of OORT.
Coinbase and Robinhood were among various significant platforms impacted by an outage at an Amazon Web Services (AWS) data center on Monday, highlighting the vulnerabilities of depending on centralized cloud providers for essential financial infrastructure.
Coinbase, the third-largest centralized cryptocurrency exchange (CEX) based on trading volume, experienced disruptions due to the AWS data center outage, which noted “increased error rates and latencies” for multiple AWS services in the Northern Virginia area.
The AWS outage caused problems for Coinbase’s mobile application, with numerous users reporting difficulties in logging in, placing orders, and withdrawing funds. The Base app was similarly affected.
“We can verify that global services and features reliant on US-EAST-1 have also recovered. We are actively working towards full resolution and will provide updates as more information becomes available,” AWS noted in a Monday update, roughly three hours after the outage was initially reported.
“We’re observing early signs of recovery, with some users regaining access to Coinbase services,” Coinbase stated in a Monday post on X, emphasizing that the “team is prioritizing this issue.”
The recent AWS outage serves as another “wake-up call” for the crypto industry, according to Max Li, founder and CEO of the AI-based decentralized data cloud platform Oort.
“This underscores the necessity for decentralized solutions,” Li remarked to Cointelegraph, adding:
“Decentralized cloud computing provides a powerful alternative by distributing data and processing across a network, mitigating the risk of single points of failure that can result in comprehensive service outages.”
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While no other cryptocurrency exchanges reported outages, several users on the stock trading platform Robinhood also indicated delays in trade execution and issues with the Application Programming Interface (API).
“Amazon down, Robinhood down, Reddit down, McDonald’s down, Fortnite down,” wrote crypto trader Kushy in a post on X on Monday .
The disruption occurred six months after a previous AWS outage affected trading services on at least eight crypto exchanges, including Binance, KuCoin, MEXC Coinstore, Gate.io, DeBank, Rabby Wallet, and Weex, as reported by Cointelegraph in April.
Amazon attributed the April outage to “connectivity issues,” which impacted at least 12 of its services.
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Amazon AWS outage emphasizes the need for decentralized cloud infrastructure
AWS offers cloud infrastructure for centralized exchanges that can manage high transaction volumes with minimal latency in trading orders. It is utilized by some of the largest exchanges, including Binance, Coinbase, BitMEX, Huobi, Crypto.com, and Kraken.
The recent outage has sparked renewed calls for the development of decentralized alternatives that eliminate single points of failure.
Layer-1 blockchain Vanar Chain has been creating blockchain-based cloud infrastructure aimed at reducing this dependency. Two weeks following the April AWS outage, Vanar launched Neutron, an AI-native blockchain layer providing data compression ratios of up to 500:1. This system allows users to store files entirely on-chain without reliance on third parties, according to Vanar CEO Jawad Ashraf.
“This unlocks entirely new possibilities: from simply storing a file fully on-chain without depending on third parties, to querying and verifying the actual information within the file,” Ashraf shared with Cointelegraph.
The Internet Computer protocol serves as another blockchain-based alternative, providing decentralized computing, storage, and hosting across global nodes. Additional Web3-based infrastructure providers include Filecoin for data storage, Akash Network for decentralized computing, and Render Network for GPU-based compute services.
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