12 exchanges including Huobi and Bithumb stopped misreporting volumes in 2019
Findings from Alameda Research show fake crypto exchange volume is not as prevalent as previously thought. While neither scenario is particularly palatable, fake volume is still a reality that plagues the crypto industry.
Although there has been a counter response since Bitwise released their findings, for example in CoinMarketCap developing more transparent tools and metrics, Alameda Research believes using different methodologies can give a more accurate view of the problem. Researchers developed six criteria to apply to a sample of 48 crypto exchanges. This list includes big exchanges like Gemini and Binance, right the way through to lesser-known organizations such as Exmo and FCoin.
Each criterion, when applied to a given exchange, resulted in either pass, fail, or undetermined. In the end, a weighted score, to take into account the higher significance of particular tests, between 0 and 5 was assigned. With 5 being the mark of an exchange that reports real volume. Full details of the tests and the methodologies applied are available in the report. They include manual investigation of trading patterns, that is, observing whether trades correspond with an order previously seen on the order book.
And, comparing the hourly volume to that of an index of well-established and legitimate exchanges. A comparison of hourly volume for two exchanges against an index of hourly volume derived from legitimate exchanges. Courtesy of Alameda Research. A score of fake volume, which takes into account live data, can be found at ftx. As such, under these alterntaive methodologies, the findings made by Bitwise exaggerated the problem of fake volume.
Bitwise concluded that only ten exchanges have real volume. Whereas the findings above concur but also show several other exchanges that deserve recognition, including Huobi, Korbit, and Zaif. At present, in a largely unregulated global trading environment, the temptation to inflate activity is a strong one. Especially so, given the financial rewards for climbing up exchange rankings. But Analyst, Sylvain Ribes describes a situation where the greed of bad actors tarnishes us all.
As such, until such time as global exchange regulation happens, if at all, we each have a responsibility to shun the bad actors. He said:. It is high time we proved it. Because as it stands the state of crypto is arguablly a testament to the failure of the free market. In short, fake volume is yet another reason why outsiders deny the legitimacy of crypto assets.
And so, regardless of where we stand on a particular matter, or whatever it is that divides the community, one thing we can all agree on is the need to boycott fake volume exchanges.
Get the Latest from CoinDesk
By starwill , October 4 in Exchanges. These are basically transactions initiated and closed at any given time, the most immediate metric being a hour period. That is what is called the daily trading volume of a cryptocurrency. Cryptographic information resources such as CoinMarketCap publish these cited figures in monetary terms. The data comes from several encryption exchanges in the market. Metrics also include the price of the cryptocurrency, total market capitalization, circulating supply and total supply. These figures are subject to change as they are affected by market forces at any given time. The trading volume can also be affected by a rush to buy buying pressure or a dump selling pressure. As much as the exchanges make Bitcoin trading much easier for everyone, they are mainly for the money. They charge commissions for transactions made through them.
Look at the core, not the wrappings
A new research report reveals details on how exchanges fabricate volume and makes new projections on A new report by Alameda Researcha http://trackmyurl.biz/free-bitcoin-trading-live-stream-practice-5400.html crypto trading firm with offices in Hong Kong and Berkeley, California, reveals a clever set of tricks used by crypto exchanges to fabricate volume.
Exchanges make money by charging users to trade, and they have many reasons to artificially inflate volume. More activity means a higher rank on the still-popular website CoinMarketCap, ctyptocurrency can attract new users.
Exchanges also charge fees to new cryptocurrency projects that want to get listed in their marketplace, and the perception of popularity helps them command higher rates. During a period when Alameda observed 15 different offers to fakke and sell litecoin in a maximum quantity of LTC, several trades printed as large as 2, Volkme, as if a buyer appeared out of thin air. Yet on some exchanges, trades get volum at prices and sizes that fall outside anything sitting on the order book.
Implausibly, several trades sailed through at sizes up to 20 bitcoin. On Singapore-based ABCC, the best bid and offers Alameda saw were for sizes excyange than one ether, yet several transactions materialized with sizes of up to 11 ether.
For more details on its methodology, see the full report. The strict regulatory environment in the U. Compared with Bitwise, which released a follow-up fake volume report in MayAlameda thinks more crypto volume is real. Forbes Special Offer: Be among the first to get important crypto and blockchain news and information with Forbes Crypto Confidential. It's free, sign up. I cover fintech, cryptocurrencies, blockchain and investing at Forbes. Before Forb. Jeff Kauflin Forbes Staff.
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