What is CoinGecko? All you need to know
CoinGecko offers reliable insights into cryptocurrencies and exchanges, helping investors navigate the unregulated crypto market with confidence and clarity.
CoinGecko, launched in 2014, stands as a prominent data aggregator in the cryptocurrency industry, differing from CoinMarketCap with a broader approach to tracking tokens and exchanges. Currently monitoring over 4,700 coins and 300+ exchanges, its founders, TM Lee and Bobby Ong, aimed to enhance transparency in crypto tracking. According to Ong, they sought more reliable metrics than "market capitalization," which they believe is easily manipulated.
CoinGecko: Comprehensive analysis of the crypto market
CoinGecko goes beyond tracking coins and tokens by market cap or exchanges by trading volume. It also monitors factors like code progress, open source development, community growth, and significant events impacting cryptocurrency values.
According to Bobby Ong, CoinGecko initially focused on aggregating developer and community metrics from platforms like Github, Bitbucket, and Gitlab. This includes tracking commits, code changes, social media metrics, and community engagement on platforms such as Twitter, Facebook, and Reddit. Their approach aims to provide a holistic view of each cryptocurrency.
In a market with thousands of cryptocurrencies and frequent new launches, CoinGecko aims to enhance investor understanding by offering transparent and qualitative insights. They advocate against relying solely on market capitalization, citing its susceptibility to manipulation.
Assessing cryptocurrency exchanges beyond trading volume
Even five years after its inception, CoinGecko highlights ongoing issues with data reliability in the cryptocurrency industry. A study by Bitwise Asset Management, submitted with a Bitcoin ETF proposal to the SEC, revealed that up to 95% of trading volume on crypto exchanges could be fake.
Bitwise's analysis of 81 exchanges over four days in March highlighted significant discrepancies. Bobby Ong noted that while high trading volume indicates liquidity in regulated markets, the situation is starkly different in unregulated crypto markets, where reported volumes are often manipulated.
CoinGecko introduces trust score to assess cryptocurrency exchanges
Amid concerns over fake trading volumes, CoinGecko has introduced a "Trust Score" to provide a more accurate assessment of exchange liquidity. Instead of relying solely on reported trading volumes, which can be manipulated, the Trust Score combines normalized exchange volume using web traffic and order book analysis.
According to Bobby Ong, this change, implemented in May 2019, sorts exchanges based on their Trust Score rather than raw trading volume. The normalized trading volume is derived from SimilarWeb traffic analysis and the median of trading volumes from reputable exchanges. Order book depth analysis includes factors like bid/ask spread and capital required to move the order book.
Ong emphasizes that these metrics offer a clearer picture of real liquidity for each trading pair on an exchange. CoinGecko plans to enhance the Trust Score further by incorporating additional metrics such as trade history analysis, wallet security, cybersecurity measures, social media engagement, user reviews, and API reliability over the coming months.
CoinGecko: A trusted resource in the unregulated crypto industry
In the volatile world of cryptocurrencies, CoinGecko stands out as a dependable source of information. Beyond tracking coins and exchanges, it publishes quarterly reports detailing market trends and significant events like Initial Exchange Offerings (IEOs) and developments such as Mimblewimble. This transparency helps investors navigate the uncertainties of the largely unregulated crypto landscape, offering insights to guide investment decisions and choose reputable exchanges with confidence.
