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Offline network
On October 4, 2021, Facebook was down for approximately seven hours.
Neither Facebook, nor WhatsApp, nor Instagram – the flagship Web2 applications were accessible to the outside world.
On the ground, developers and other problem solvers were even deprived of the tools they needed to work and communicate. Some employees were unable to enter company buildings or conference rooms because authentication systems for scanning badges were also out of order.
Facebook somehow went offline.
The issue was caused by a configuration error in the software used to route traffic to and from Facebook’s data centers, Border Gateway Protocol v4, also known as the “Internet mail service.”
Tech giants like Facebook, Google, and Amazon are known to be building their own internets, internets within the internet, so that they can stay online without relying on anyone else.
With that in mind, Facebook, WhatsApp and Instagram still existed – technically – the internet just didn’t know how to connect to them.
Facebook, like other tech giants, places its data centers around the world, allowing it to reroute traffic to different destinations during periods of high traffic in certain regions (and protect against natural disasters that could swallow up all of our personal data).
So, even though Facebook was working to decentralize its physical operations from the rest of the Internet, one single mistake still managed to ruin everything.
The recent TON outage, which also lasted seven hours, may be a similar situation. But without a technical autopsy, we basically don’t know what caused it.
We know that the airdrop of the new memecoin, DOGS, caused a surge in activity on the chain that knocked validators out of consensus. This meant that they couldn’t agree on which block should be added to the chain next.
When the airdrop was activated, the number of transactions per second increased to a maximum of 280, which appears to be a typical limit for the network – far below the 100,000 transactions claimed by TON.
The previous incident in December involved signature spam when the number of transactions per second was around 300.
In this case, validators coordinated their actions on Wednesday morning to reboot the network, as has been the case with numerous Solana reboots over the past few years.
It’s unclear whether centralization was a factor in the TON outage. Let’s say there was a logic glitch buried somewhere in the validator client, hypothetically fixed if there were more validator clients created by different teams — especially ones that could handle large volumes.
“The short answer is, ‘The technology is crap and could be better,’” Mikko Ohtamaa, an early Bitcoin developer and co-founder of Trading Strategy, told me this morning. He’s been tracking and writing about these outages on X.
“The root cause is a poor developer culture – in the short term, distribution is more important than technology. TON has undergone several security audits, none of which have been published. The first step would be to fix this,” he said.
Decentralization is such a vague term that it says almost nothing about the state of blockchain technology stacks. It’s all a spectrum, and something can only be decentralized relative to something else.
At the same time, there are blockchains that are much more resilient to downtime than TON and even Solana (the two largest of which are Bitcoin and Ethereum).
Decentralization for much of the Web3 space is primarily about control. Whether a network or protocol can be taken over by any particular entity or group – not whether it is secure from going dark.
Possibly in Web4.
— David Kanellis
Data center
- TON fell by about 6% during a glitch that saw cryptocurrency exchanges suspend deposits and withdrawals. It has now fallen 20% following the arrest of Telegram CEO Pavel Durov.
- BTC and ETH each have lost 4% in the last day. (BTC: $59,920; ETH: $2,520).
- Memcoins and AI-related tokens were the leaders of the past week. Edema POPCAT 71%followed by FET (46%) and RENDER (33%).
- $130.56 million leaked from Arbitrum of Bridges Over the past week, the outflow of funds from Ethereum has exceeded the outflow threefold.
- NFT Sales Volumes Around the World They have fallen more than 40% to $382.8 million in the last 30 days, according to CryptoSlam.
Choose your fighter
Speaking of TON, we are finally seeing altcoins waking up a bit, although the szn altcoin is still nowhere to be found.
“Altcoins also show significant activity, especially in response to certain news events. For example, the arrest of Telegram CEO Pavel Durov led to a sharp drop in the price of TON, accompanied by a major liquidation event,” Hyblock Capital wrote in its note.
“Interestingly, despite this price drop and liquidations, open interest in TON has reached an all-time high, indicating that traders remain active and may be seeking to capitalize on the volatility. This behavior suggests that the market is not sitting on the sidelines, but rather is beginning to actively seek opportunities, even in the face of uncertainty.”
It seems like the market is going through a bit of a reactive moment right now, as different segments of the cryptocurrency react to different events.
Zooming out, however, according to Hyblock, Bitcoin has several liquidity zones to keep an eye on.
“Bitcoin itself has seen a notable increase in volatility, rising from 60,000 to 64,000 before entering a period of consolidation. Market participants are watching this behavior closely, especially as retail longs are rising. Historically, increases in retail longs have been inversely correlated with the price of Bitcoin, which often signals a bearish outlook,” CEO Shubh Varma wrote.
BRN analysts noted that the technical picture is “mixed,” showing “a lack of clear market direction.”
The drop could see Bitcoin fall to $54,000-$56,000. However, QCP is not too concerned about this despite the drop to $58,000 we saw yesterday.
“We believe that any decline in stocks (and cryptocurrencies) will be short-lived. With Powell and the Fed poised to start a rate-cutting cycle, increased liquidity will eventually push risk assets higher. We are finally on the cusp of a rate-cutting cycle,” the analysts said.
The last thing I want to mention is about stablecoins.
According to Patrick Scott of Dynamo DeFi, stablecoins (excluding algorithmic stablecoins) are reaching new all-time highs and even exceeding 2022 levels.
And since Scott’s post over the weekend, the market cap has actually jumped to $169 billion, according to DeFi Llama data.
Cryptocurrency is currently a mixed bag, with different segments of the market driven by different trends.
As we head into September, it will be interesting to see what stories begin to dominate this cycle.
– Katherine Ross
Works
- Durov’s brother, Nikolay Durovis also wanted by French authorities, Politico reports.
- MakerDAO has been renamed to Sky in an attempt to “attract” mainstream users.
- After seeking a potential sale earlier this year, Osprey Funds is selling the assets of the Osprey Bitcoin Trust Bitwise-x Bitcoin ETF.
- Cryptocurrencies will likely be regulated US Treasurynot necessarily the SEC, Axios reports.
- Cryptocurrency Price Rise Leads to Creation of 88,000 New crypto millionaires so far this year, according to Henley & Partners.
Riff
“You all know who they are, we had a lot of fun with them.”
This is a Donald Trump NFT ad that came out this week. Yes, the 45th President of the United States of America (and potential 47th President of the United States of America) is trying to sell digital trading cards of himself again.
By once again claiming they look like baseball cards, Trump has returned to one side of what has proven to be a lucrative cryptocurrency business.
“These cards show me dancing and even holding some bitcoins,” he tells the camera.
Trump has been a bit quiet on the crypto front since he stunned Bitcoiners in Nashville and collected an estimated $25 million from the industry’s deepest political pockets. But here he is, doing what he does best: selling something with his name on it.
If that riff sounds a little tedious, well, your reading skills are spot on. It’s hard to shake the feeling that it’s really all about the royalties.
But hey, who am I to judge? As Trump himself told the Nashville crowd: “Have fun with your bitcoins, your cryptocurrencies, and whatever else you’re playing with.”
– Michael McSweeney
