Say NO to CoinMarketCap

RIP CoinMarketCap 2013-2020

By Creepto | Creepto on Crypto | 15 May 2020


What is CoinMarketCap?

According to CoinMarketCap's LinkedIn page:

CoinMarketCap is the world's most trusted & accurate source for crypto market capitalizations, pricing and information. CoinMarketCap is a U.S. company registered in the United States of America.

According to a Fortune article (original has been removed, but can be found on WayBack), the person behind CoinMarketCap is Brandon Chez, a “programmer from Queens, NY”.

At the end of March of this year, Binance decided to acquire CoinMarketCap for $400 million. This led everyone to ask two questions:

  • Why would an exchange need a site that merely shows numbers?
  • How could a site like that be worth $400 million (!)?

It seems like we now have a possible answer to both questions.

Why Buy a Media Site?

CoinMarketCap shapes our opinions. Not just about which coins to trade, and how much we should expect to pay for them, but also on which exchange is it worth trading them. It’s important to notice that while exchanges do not base coin prices on CoinMarketCap valuations, traders absolutely do.

The Wall Street Journal article that “doxed” Brandon Chez, did so after a single move he made – delisting South Korean exchanges – caused an estimated $100 billion in value to disappear. This move demonstrated how a site that “reports about the industry” can actually directly impact the industry.

By now we all know how Changpeng Zhao (or CZ) communicates. Much like the orange baboon at 1600 Pennsylvania Avenue, he tweets his opinions in an attempt to influence markets. So, when he started tweeting about the way CoinMarketCap ranks exchanges, it was clear that he was more than just sharing an opinion – he was ordering a change.

We listened.
@coinmarketcap updated exchange rankings by incorporating web traffic factor. Check out the update rankings at URL below and let us know what you think. – @cz_binance

To no one’s surprise, CoinMarketCap changed the way it ranks exchanges, giving more weight to web traffic (over actual transaction volume), which made Binance the new de-facto top exchange. This ranking methodology was objected to by CoinMarketCap itself as recently as August of last year. Citing the fact that many transactions on exchanges are now carried out via apps and APIs, and the fact that web traffic can be easily manipulated.

Furthermore, it just came to light that CoinMarketCap removed trading information that shows wash trading on Binance. This indicates clearly that Binance now controls the medium AND the message on CoinMarketCap.

The answer: To control and shape the information and drive business to Binance.

Was It Worth That Much?

It didn’t take Binance long at all to put its new acquisition to use. By making itself the highest-ranking exchange on a site – a site that purports to inform traders – Binance hopes to get more business going its way. By hiding shady practices like wash trading (and who knows what else), Binance hopes to retain an image of a clean and safe place to trade. Will it generate $400 million in business for them? I don’t know – but I’m sure CZ does.

He who controls the information, controls the world

“He who controls the information, controls the world”, as the saying goes. And CZ is out to prove it right. “We listened,” says CZ, like the most common dictator, who pretends he’s screwing you over for your own good.

The answer: A resounding “Yes”.

What Should I do Now?

1. From this point onward, CoinMarketCap is a Binance marketing site.
Accept the fact that information on CoinMarketCap is compromised. Treat every bit of price information as potentially tainted. Try to think of the worst way a person like CZ might use it to skew information his way, and assume that he would. Every price, every volume, every coin listing/delisting is there to serve Binance.

2. Look elsewhere for actual crypto data. There are other sites that provide the same information (CoinGecko, TradingView, to name a few).

3. Remove CoinMarketCap from your crypto bookmarks. Remove their app from your phone. And for good measure, try to avoid Binance – no reason to reward them.

Stay Safe!

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I'm a developer and technologist, and have tried every framework and gadget at least once. I used to blog religiously and am hoping to find my way back to writing. My current passion is getting "laypeople" to appreciate and use crypto products.

Creepto on Crypto
Creepto on Crypto

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