Several users reported that on April 2, the Federal Reserve Bank’s real-time settlement system took a short time. This prevented the bank from completing many transactions, and the incident further highlighted the problem of centralized systems. On the other hand, Bitcoin's uptime since its inception has remained at 99.98%.
Federal Reserve: Fedwire dropped
According to several users on different social media, on April 2, Fedwire, a real-time total settlement system owned and operated by 12 Federal Reserve Banks in the United States, took a chance and lasted for a few minutes.
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A user detailed this on Reddit:
Today, the Federal Reserve has encountered an unexpected problem and it has completely collapsed. Wire transfers throughout the country have stopped. The issue remains unresolved, but it seems that no news agency has reported the incident and its huge impact.
According to the official website monitoring the status of the Federal Reserve (Fed) service, the Fed has activated Fedwire Funds after the incident.
However, an Instagram user successfully screened the status page when Fedwire Funds closed.
What is Fedwire Funds?
Fedwire is a real-time central bank gross settlement system that electronically settles US dollar payments among its members. The system is owned and operated by 12 Federal Reserve Banks in the United States.
However, this is a huge network of processing payments between member banks and other participating institutions. These institutions include US branches of foreign banks, deposit financial institutions, and so on.
The scale of the system is extremely large, and Fedwire processed more than $2.8 trillion a day in January 2019. In contrast, the total amount of Bitcoin transactions in the year 2018 exceeded $3.2 trillion.
Why is this system so important?
Fedwire Funds plays a vital role in the processing of payments between member banks in the United States. Therefore, these transactions are delayed or failed while the system is offline.
The Reddit user mentioned above explained the seriousness of the problem associated with Fedwire downtime:
My work requires wire transfers, and all wire transfers are not sent or received at around 12:00 West Coast time. I think most people don't realize this because it's a regular deadline. But we have a few transactions that we can't do today, because no bank can send us money, and we can't send it.
Bitcoin far better than the Fed?
Although there seems to be no explanation for the Fed’s downtime on Fedwire, this is another example of a problem that highlights the centralization system. This is not the first time this happened because Visa and Wells Fargo have experienced similar problems in the past. However, if things have not changed, we are likely to see more similar incidents happening.
Decentralization can solve the vulnerabilities and single points of failure inherent in many centralized systems. Perhaps it is this problem that further highlights the power of Bitcoin. So far, Bitcoin has been running at 99.9835% since its inception.