Yesterday, the whole crypto sphere learned in The Block that Binance is in the final stages of talks to acquire CoinMarketCap. Funny announcement just before April 1st, right ? On the first hand, it may show that the market is going mature, and even after the 2017 bubble, mergers and acquisitions keep going without saying that we are in a very uncertain economic period. On the other hand, CoinMarketCap is one of the most used crypto data provider worldwide and Binance the biggest exchange in terms of users. In the hypothesis that such a conglomerate would emerge, we may wonder whether the users are for real protected from manipulation and lack of transparency ?
CoinMarketCap should not be considered for data providing
Even though it’s for an April fool that the homepage of CMC displays today the price of the Toilet Paper Token, it’s not unusual to find irrelevant or mysterious data on their platform. But this time with this strange announcement of a possible buyout by Binance, it may seem more like a contempt toward the whole community than a joke.
Indeed, it is not a new thing that lot’s of users are questioning the legitimacy and the realness of numerous data provided on CoinMarketCap. CMC has been built by Brandon Chez, a mysterious 30-years-old programmer from Queens. It was the first in the game and he built over the years a leader position which cannot be questioned. It’s said that it’s the “homepage” of the crypto world as lots of crypto traders or simple owners are watching the markets from this platform. It’s the most known brand in the crypto area. We can find good qualification as the one of Carylyne Chan, chief strategy officer at CoinMarketCap in an email : “CoinMarketCap strives to be the most comprehensive resource in the crypto space”. And it is true in many ways but not for all users.
To understand the root of this tremendous issue for the biggest crypto website, it is important to remind us that CMC’s main goal is not to provide crypto markets data and even less high qualitative data. Its main mission is to attract as many as possible users in order to sell ads. According to Forbes, CMC could generate between 20 million and 30 million dollars in ad revenue per year and already managed to hit the 100-million revenue during the bull run. And their very subjective version of the crypto markets help a lot to maximize traffic like using click-bait title in some ways.
CMC wants to drive traffic to be able to sell its audience to advertisers. The paradox of the model appears here very clearly. You have to cover more and more exchanges, new token projects even worst scammy ones, to attract as many communities as possible as quickly as possible. It’s a very basic equation. This imperative does not allow to pursue a logic of selection of data providers and investing in more qualitative data processing.
User Expectations
It’s been a long time that the crypto sphere around the world is challenging and criticizing the CMC approach. CMC is far from providing fair and reliable data. It’s definitely not the best suited for any professional / financial usage and it’s not the best way for the crypto markets to evolve and become more mature. And what is expecting every crypto user for such a crypto markets data provider as CMC is to provide professional grade data without any doubt on it and any feeling of being cheated by any manipulations.
CMC has left this precise mission a long time ago as we explained in the last paragraph of this article. Since then, users have been more and more complaining about CMC’s data. In an effort to correct the shot that could harm their brand image, CMC tried to change by acquiring Hashtag Capital, a startup developing algorithms that analyse “all points of available liquidity” in order to more accurately reflect an asset. Besides, they developed some internal solutions, by trying to launch new metrics and algos which were supposed to remove any fake or manipulated volume. All these initiatives has been so far failures. CMC had always been shady about their process of excluding dubious exchanges. It will remain so because their business model depends on it.
What Binance is buying
There is no doubt that CoinMarketCap is a huge web traffic source as the leader of the crypto data providers and that its visitors are not the same as the Binance ones. CMC visitors — 207 200 000 in the last six months — are all potential new customers for Binance (only 113 800 000 visitors over the same last six months). With that in mind, we can easily understand the Binance’s strategy and the main reason of this transaction. They are buying the brand, not the asset or the IP of CMC.
Here we are
Here we are. What is highlighted by this situation is not new for us. CMC was bashed before by lots of users and we started to build koinju.io with all this in mind. From Day 1 at Koinju, we’re building a new platform, based on trust, transparency and we don’t want to fall into any conflict of interest, mixing exchanges and data providers. Koinju’s vision is straightforward : a good product co-designed with users and customers and very clear positioning in terms of market regulation.
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And with all that in mind, switch to https://koinju.io/ for your crypto data!
