CoinMarketCap has kept its place as the crypto industry’s most popular and best-known tracking service for various market capitalization measurements for bitcoin, altcoin and trade volumes on exchanges. Despite its trust-worthy reputation, research from cryptocurrency index fund provider Bitwise revealed that a large part of CoinMarketCap’s numbers on exchange volume were not real. This was part of Bitwise’s Bitcoin ETF Application, which claimed that 95% of reported BTC spot volume on CoinMarketCap is fake.
As a trusted source for numerical data in the cryptocurrency market, CoinMarketCap’s website has significant influence on the cryptocurrency industry. As a result, CoinMarketCap is listening to the feedback following this report and making appropriate changes to their website. The exchange plans to include liquidity measures, hot and cold wallet balances and traffic data for the listed exchanges. CoinMarketCap has also asked its users for additional feedback on the types of metrics they’d like to see on their official Twitter account.
When speaking to Bloomberg about this issue, Carolyne Chan, global head of marketing for the site commented on how they hope to provide more transparency:
“For instance, if an exchange with low traffic has $300M volume and just 5 BTC in its wallet, users will be able to draw their own conclusions without the need for us to make arbitrary judgment calls on what is ’good’ or ’bad’. We want to state that our philosophy is to provide as much information as possible to our users, so that they can form their own conclusions and interpretations –- and not introduce our own bias into that mix.”
This is another step in creating a more transparent economy for the cryptocurrency industry, following CoinMarketCap’s decision to remove volume requirements to list exchanges and having them list their establishment dates last July in order for users to better judge an exchange’s history.
Moving the Cryptocurrency Industry Forward
While many have voiced their dissatisfaction with the fake volume reports on CoinMarketCap, this revelation may actually be able to help push the cryptocurrency industry forward. Binance, one of the largest cryptocurrency exchanges globally, is reportedly working with CoinMarketCap’s team to resolve these issues. The CEO of Binance, CZ (Changpeng Zhao) spoke to Cointelegraph on 27 March and commented that he doesn’t think CoinMarketCap is at fault for this issue:
“It’s not so much CoinMarketCap’s fault, everyone tried to blame on them [sic]. But CoinMarketCap has a very simple reporting mechanism where every exchange reports their own data to them, and they just show it.”
CZ believes in CoinMarketCap’s commitment to providing more transparency within the industry and making changes according to the feedback that they’ve received. In working directly with CoinMarketCap’s team to improve on reporting, he proposed penalties like delisting from CoinMarketCap for exchanges that deliberately show fake volumes.
While the display of fake exchange volumes on CoinMarketCap’s website is an unfortunate byproduct of a new and emerging market, this shows a dedication across the industry to provide the most accurate and valuable information possible to its consumers.
Image via CoinMarketCap