The Federal Reserve’s automated clearing house (ACH) system went down for 14 hours from 3:30 pm on December 18 until 7:40 am on December 19. Since commercial banks in the United States depend on this system for their ACH transactions, ACH payments across the country were disrupted by this incident. This shows the risk of depending on a centralized payment network.
Essentially, if a critical piece of a centralized payment system breaks it could take the entire network down. The Federal Reserve says the ACH payment system is now fixed, but it is unclear why this happened. In-fact, Bloomberg requested further information via the Freedom of Information Act, and the Fed’s board of governors denied the request.
This is actually the 2nd incident this year, since on April 1 the FedWire interbank funds transfer service went down for three hours.
Decentralized networks like Bitcoin (BTC) do not carry the same risk of going down. Indeed, Bitcoin (BTC) has 99.9846% uptime, with a total of 15 hours of outages spread across two incidents in the entire 11 year history of Bitcoin (BTC).
Basically, Bitcoin (BTC) runs on a decentralized network of thousands of computers spread worldwide, and as long as even a small fraction of those computers remain operational, then the entire Bitcoin (BTC) network continues to run smoothly. In other words, no single computer failure can take down Bitcoin (BTC).
That being said, the Fed ACH system processes nearly 700 transactions per second, while Bitcoin (BTC) only processes 7 transactions per second, so Bitcoin (BTC) has a long way to go before it can replace centralized payment networks.