In the cryptocurrency ecosystem there is always a lot going on at once from numerous companies announcing updates to changes in the crypto price that a lot of news simply is viewed, digested, forgotten about and the process is repeated the following day. This fast food culture (which exists in all news cycles, crypto is no different or worse) created by an influx of information 24 hours a day makes it very hard to stick to a story / theme, take it a part and get to the very bottom.
So in this post, that's exactly what I am going to do. I will focus on one story after a few days of it breaking, look at it indepth and give my thoughts about it as a (cryptocurrency marketer for over 4 years, working with numerous top 100 projects).
This post is concerning CoinMarketCap's recent changes connected to the Binance buyout. CoinMarketCap is probably the most well known crypto website on the globe, but first let's set the scene.
What is CoinMarketCap?
Most of you reading this article, will be very aware of who CoinMarketCap is and will be accustomed to seeing the above image, but to those who are unfamiliar, let's break it down.
CoinMarketCap (Or from now will be referred to as CMC) is a crypto comparison site created in 2013 that lists established cryptocurrencies and exchanges. This is the main website that people use as a source for the price of a cryptocurrency whether they are new to the crypto world or a piece of old furniture in the ecosystem. People might think this is a simple website but :-
1) Major crypto news outlets will use their CMC's data in their articles, it is a prime source for numbers and that's not taken into consideration crypto bloggers.
2) This website is ranked in the top 700 websites globally, which means it has immense power. NBCNews is listed only 100 places above CMC for an idea of the amount of traffic.
3) You are not considered an established token / exchange unless you are listed on that website because of the amount of traffic that comes with it / the reputation CMC has created for itself.
4) CMC is the portal for new comers into the cryptocurrency space as they are ranked highly on Google and are / were considered unbiased and reliable, just Google Cryptocurrency, Crypto Exchanges, Cryptocurrency Market and they are ranked number one. I also would bet that CMC's link is listed on the first page of Google for the majority of all cryptocurrency projects if they are listed (Maybe not Bitcoin).
There are other websites that offer the same services that are great, but they are trying to get to that level of influence that CMC wields. Below I have listed some of the more well known CMC competitors to show you they are still far away from the traffic that CMC has.
CoinMarketCap -627 Alexa Ranking
CoinPaprika -26,755 Alexa Ranking
CoinGecko -7,539 Alexa Ranking
WorldCoinIndex - 26,842 Alexa Ranking
CryptoCompare -12,341 Alexa Ranking
The Controversy Begins
Around April 1st of this year, there were rumours of a deal worth over $400 million between CMC and Binance, but most people thought it was just a rumour / A great April Fools joke. By the 2nd of April though, it was confirmed not to be a joke, but in fact very real.
On top of the buyout, there was a shift in CMC's staff as founder Brandon Chez is stepping down as CEO while the current CSO Carylyne Chan stepping up to act as CEO.
Six weeks pass since this event and we didn't see any major changes. Then on May the 14th, CMC changed its methodology to rank exchanges on their web traffic by default — a metric that puts CoinMarketCap’s new owners Binance in the top spot. The new ranking methodology prioritizes web traffic over CMC’s painstakingly developed “liquidity metric,” which was only introduced in November and was due to become the default ranking.
The very interesting as that this stands in stark contrast to the words of CoinMarketCap’s Chief Strategy Officer and acting CEO Carylyne Chan, who said in a podcast interview late last year that web traffic was “not a good indicator.”
This has been met with a backlash in the cryptocurrency world from both well known names as well as crypto enthusiasts, Ciara Sun, VP of Huobi, claims that the exchange is leveraging its itself. As well as OkEx chief strategy officer, Alysa Xu, claiming the platform dead.
The criticism has been so large, that it has even pushed Binance to release a statement today, stating that CMC is still independent, but it seems that nobody is buying it.
Needed Changes Welcomed?
CMC is far from perfect even before the buyout, there has always been an issue around cryptocurrencies that are listed on the platform that have no liquidity and exchanges wash trading.
After a BitWise report in 2019 found that 95% of cryptocurrency trading was misleading, there was pressure for the website to correct its data. However, the data analytics site was slow to respond and only recently added ‘real liquidity’ numbers.
Many had hoped that Binance’s acquisition would help correct the fake numbers reported by CoinMarketCap. However, the exchange seems to have replaced real volume metrics with ‘liquidity’ which is scored from 0 to 1000 based on order book slippage. Wash trading remains reported like before.
Is Binance the Amazon of the Crypto World?
Although this is by far the biggest buyout from Binance, it is by no means the first. In November 2019, Binance acquired Mumbai-based bitcoin exchange WazirX, it was estimated to be between $5-10 million. Binance also purchased Trust Wallet back in mid 2018 in their first official buy out. These are also only the bigger moves that have been picked up by news outlets and I am sure there are many more, but I wanted to give you some prime examples in the direction that Binance is moving.
It seems that Binance is moving towards a model of creating a monopoly, which most people appose even outside of the cryptocurrency world.
Although I am not against companies spending and investing into projects that allow mutual benefits, the CMC buyout is one that I have strong negative feelings about. Although $400 million is a huge amount that would make most of us spit out their beverage, as a cryptocurrency marketer I see the huge advantage that having a website that has -
a) A well respected brand / a high level of trust that everyone uses in the industry.
b) Huge amounts of traffic (we are talking millions of users a month).
c) A website that newbies use when they are first looking into cryptocurrency.
Sadly CMC cannot be seen as an unbiased website anymore and although there has only been a few changes so far I highly suspect we will see a lot more "improvements" that will help out Binance.
One of the amazing things about the cryptocurrency industry is that currently it is still small. As we have seen with the recent Hive / Steemit debacle, the users are still the most important asset. If you disagree with what has happened simply use one of the websites above and if you don't agree with Binance or like their system, there are plenty of other exchanges.
Trust in a system can be broken very easily and cannot be earned back.
But what do you think about it? I would love to hear what you think about this and the future of CMC. This is an opinion piece and if you want to see more content like this let me know. As always if you enjoyed the consider following me and tipping the article.