Since Publish0x has been collaborating with CoinGecko, most of you are already kind of familiar with that brand. But what exactly is CoinGecko?
CoinGecko launched in 2014. CoinGecko is one of the earliest and largest data aggregators in the industry, taking a more holistic approach to tracking tokens and cryptocurrency exchanges. CoinGecko currently (03/12/2020) tracks 6,925 different coins and tokens and over 400 different exchanges. Many of you also know CoinGecko from the CoinGecko widgets that can be included in a post on publish0x like this one:
What Are CoinGecko`s Goals?
With the goal of "increasing the crypto-participants' understanding of fundamental factors driving the market," CoinGeckos founders TM Lee and Bobby Ong wanted to find more transparent ways to track cryptocurrencies.
"We believe that 'market capitalization' is not a very big measure of the value of a cryptocurrency because it is heavily manipulated."
With thousands of cryptocurrencies on the market and new ones created every month, the CoinGecko Crew wants to help investors better understand the altcoins available by giving investors as many transparent and qualitative facts as possible.
A Transparent Analysis Of The Crypto Market
Rather than just tracking and measuring coins and tokens by market capitalization or exchanges by trading volume, CoinGecko also tracks other key factors. These key factors include a project's code progress and open-source code development, community growth and other important events that affect its value. Bobby Ong explains:
"We started out as a crypto data aggregator for developers and community metrics. For developer statistics, we track Github, Bitbucket, and Gitlab. We count the number of commits, added/deleted lines, stars, forks, and pull requests. For community statistics, we track Twitter followers, Facebook likes, Reddit subscribers, new posts and comments. We believe that by measuring community and developer statistics, we get a 360-degree view of certain cryptocurrencies."
This makes CoinGecko a transparent tool for an in-depth analysis of the crypto market.
Problems Of Market Manipulation
Data and market manipulation is still an important issue in the industry. That`s why the trading volume itself is unreliable for the valuation of cryptocurrency exchanges.
When Bitwise Asset Management submitted its Bitcoin ETF proposal to the SEC last year, it included a study showing that 95% of trading volumes on cryptocurrency exchanges were counterfeit. Bitwise reached this conclusion after analyzing 81 exchanges over four days in March. Shocking statistics like these show that the actual market for Bitcoin and other cryptocurrencies is much smaller than it appears. Bobby Ong remarked:
"Fast forward to 2019, we came to a phase where cryptocurrency exchange data was heavily manipulated. In the regulated traditional markets, the volume reported by exchanges is very trustworthy, and a high volume indicates that there is more liquidity in the exchange. In unregulated crypto-markets, however, the reported exchange volumes are heavily manipulated."
CoinGecko Trust Score
When statistics such as these make the rounds, it is impossible to judge the liquidity of an exchange only based on its trading volume. You also have to look at other metrics. Now, this is where CoinGecko comes in. The company recently launched a feature it calls "Trust Score" to combat bogus trading volumes.
"Instead of sorting exchanges by 'total reported 24-hour trading volume', CoinGecko now sorts exchanges by Trust Score," says Bobby Ong.
"This is a combination of normalized exchange volume with web traffic and order book analysis. The change came into effect on May 13, 2019 on the CoinGecko Exchange Overview and Coin pages".
CoinGecko also produces quarterly reports on the state of the cryptocurrency industry. These quarterly reports provide additional insights into key issues of the whole cryptocurrency industry.
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