CoinMarketCap Issue and Centralization

Perhaps the most controversial and plainly outrageous recent event in the crypto world has to do with the spontaneous, unannounced and arbitrary decision of the previously-reliable website CoinMarketCap.com of temporarily removing Korean exchanges from their total balance.

The result was a spontaneous bloodbath which triggered trading bots to instantly sell and consequently hit many users’ stop loss limit. Quite a few billions of dollars were lost from the total crypto market capital, and until the official tweet from the CoinMarketCap account, most crypto investors and traders blamed the maneuvers on the manipulating whales.

The issue has reminded us all of the vices of centralization

You rely too much on a centralized authority, you get burnt. Also, if you think you can outsmart everyone else by using only one source for your trading bots, then maybe you’ll think twice next time.

And even though we have plenty of alternatives to CoinMarketCap and we can create aggregators to generate a more reliable average, maybe that it’s time for such platforms to become truly decentralized and work according to a consensus between peers.

The arbitrary decisions or one party shouldn’t cause mass panic and hysteria in the community, and we also require a mechanism which detects cheap tactics such as removing an important country’s entire capital from the total market capital.

Also, here’s to hoping that, until we figure out a better (and hopefully decentralized) way of determining the crypto market cap, we wisen up and learn to use more than one source for automatic trading mechanisms. If such a small change can crash the market, then the entire community is put to shame and we once again give the Wall Street Journal good reasons to mock crypto trading and prove their unstable nature.

And in regards to CoinMarketCap: we should have a smart contract which makes you accountable for such maneuvers.