OH NO! COINMARKETCAP.COM PUMPS SCAM COINS BY ACCIDENT -- Marketcap = Price x Available Supply ?
STOP MAKING MISTAKES with coinmarketcap.com by reading this for just 2 minutes or less!
Pros
- coinmarketcap.com is very popular
- it is easy to use, just LOOK the page
Cons
- coinmarketcap.com is very popular
- it is easy to get bad marketcap info, just LOOK at the page
Q: Ok, this does not make any sense. How can being popular be both a PRO and a CON?
A: If everyone is using it, and only a minority know how to really read it, it means that the majority is trading with false perceptions of what the data is showing. (This is how sharks stay wealthy, and everyone else is shark bait)
Q: Ok, what bad marketcap info are you talking about?
A: It is going to take me 120 seconds to tell you, but you have to actually read this post. It is not glanceable like coinmarketcap.com LMAO :)
A VERY FAST lesson of how coins appear on coinmarketcap.com
- Coin must be on some recognized exchanges, and each exchange needs an API for the feed data
- Coin price is determined by average price from multiple exchanges
- Average price is weighted by the trading volume of major exchanges
That is it!
Now let us find out what can go wrong (and is actually wrong) with a lot of coins shown in the top 100 on coinmarketcap.com
Any coin can be falsely represented on the first page of coinmarketcap.com if any of these points are true:
PRE-MINE:
The coin had a huge pre-mine. Pre-mined coins just have an asterix ** beside themSCAM-LAUNCH:
A coin without fair distribution can be listed (ie: the founder released buggy code during the first start of the blockchain to gain an unfair advantage and scam a lot of coins this way)ARTIFICIAL PUMP OR DUMP:
Coins with a pre-mine and/or scam launch often have bots created by the pre-mine or scamlaunch holders to buy and sell these pre-mined and scam-launched coins to themselves to artificially raise the price on exchanges, which directly affects how a coin is listed on coinmarketcap.com
The majority of people buying and selling coins these days are amateur traders who look at coinmarketcap.com like it is a real indication of what coins are trending.
Let me ask you some questions:
Q1: Where are the help pages and documentation on coinmarketcap.com? Go find it. Do you see it?
Q2: Where are the disclosures about the accuracy of the information?
Q3: Where are the warnings, disclosures, and advice to users when making determinations from that data?
If you are like me, as of the writing of this post, Q1, Q2, and Q3 *none of that exists!!
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So if you were a coin developer, or investor, could you manipulate ranking of the coin of your choice on coinmarketcap.com knowing how simple the formula is?
Of course you could.
If you were a skilled and experienced user, could you do research and make your own decision about which coins are a bad investment? Of course.
Herein lies the problem:
The majority, and I mean, HUGE MAJORITY of all coins bought and sold each day, are done with the trending charts and numbers shown on coinmarketcap.com because that is what all the shark bait newbies use, when making their investments.
Even the sharks use coinmarketcap.com to look through the rose-colored glasses that shark bait wears, to either manipulate the chart data (to cause a shark bait feeding frenzy), or to spot which coins shark baits are likely to buy or dump next.
Are you a shark? Or are you shark bait? You might be both without knowing it.
Why this is a problem:
Money is quite often getting invested in poor technologies that only seem to have a good looking coinmarketcap.com chart or growth numbers. That is not good for the industry
Scam coins, and coins that do not scale, are getting way more attention and following than they deserve
Developers, marketers, communities, and adopters are wasting life hours with a coin that won't be around in 5 or 10 years
There are only a few Developers, marketers, communities, and adopters that are investing time with good, fairly distributed coins. (We need more) This hurts the evolution of cryptocurrency as a whole.
When will this change?
After people learn the hard way on how to stop being shark bait. Or...
Maybe after coinmarketcap.com changes their formulas to make their data less easy to manipulate by including reputation rank, much like Google does a PageRank, to weed out manipulated coins, scam coins, pre-mined coins, and unfairly distributed coins, by weighting each coin based on new industry standards for coin reputation.
I will talk about coin reputation rank in an upcoming post. If you are an entrepreneur and would like a business opportunity to build on...
COIN REPUTATION RANK is an indicator that will help us get out of this mess.
P.S. This is why STEEM and BITSHARES don't trend as high as other coins. Just so you know.
Like diversifying investments.
Utilize a diversity of research and methods of understanding so you have a better understanding.
Upped & followed. Thanks for the info. I am an amateur trader, so this is great to learn now, before it is too late. Thanks again :)
You're lucky. I had to learn this the hard way. Sharks decide where the price of most coins move. Everyone else tries to "time the market". One of the rules of investing, is to never "time the market".. this is moreso true when the markets and data are manipulated.
Everytime you buy a coin, there is 5-6 heavy whales on skype or some other platform talking to each other saying things like "Ok, want to raise the chart on this coin? Where's our high at? When are we dumping it?" it's all collusion. If you follow the graphs as your sole source of information, you will be in trouble over the long term.
I agree with you that coinmarketcap.com is the most popular or it is easy to use, just LOOK the page.
Just like anything else, compare the charts to at least 3 different resources like if you were getting a quote from an insurance adjuster or a DX's from a Dr's office.
I like these 3's just in case you didn't know.
Frank III
So much effort you put in your post. Thanks for the advice. I personally only use Poloniex to decide.
So what coins or assets that trend above Steem and Bitshares do you consider scams? Just curious.
Great question. I have quite a few answers.
I'd rather not tie up the discussion with everyone flaming each other on which coin is better than the rest at the moment. That's what always happens. Bagholders will defend their bag till the bitter end, and it creates a lot of enemies and a war pretty fast.
So that's why won't answer this..
But I did give you some hints on how to find them. Go back and read old coin threads from the very beginning when a coin was launched.
Blockchains keep coin value history, everyone knows that..
BUT! Forum text and graphics can be re-written, taking things out of context.
Pretty cool how you can re-write history on Bitcointalk.org and most people don't know it. :)
If you're really good, you can look at old forum posts on web.archive.org the way they use to look like, vs how they look like now and there is some very interesting things people want hidden. :)
Seems like to me, that any new coin announce really could have used steemit instead of bitcointalk, so nothing could be deleted or changed, without a full history. We could have used this back in Jan 2014 during a very popular coin launch named Xcoin (different than X-Coin)
I'd love to see a coin reputation system. That sounds fantastic. Looking forward to the next post.
Curious, if you're willing to share, what are some of your top altcoins you think will have great long-term value?
https://www.coingecko.com is also a good resource.
Great thread. I was about to post a similair thread. Scams are here just like in any other growing market where there's money to be made. We just need to do proper research for every crypto we invest in. I found this amazing platform: https://www.coincheckup.com Since I use this site I make so much less basic investment mistakes.