It is extremely important to verify the accuracy of the data on the websites that evaluate digital assets trading platforms and to manage your investment only by referring to reliable websites.
Akar Aydemir / Paribu Business Development Manager
Kyra Mengeş / Paribu Digital Communications Specialist
It is important to examine the basic and technical features of cryptocurrencies, it is equally important to research about the trading platform where one is to carry out transactions and be informed about its services. One of the resources to which users can consult is the rating websites that evaluate digital assets trading platforms.
It is critical to ensure that such resources are reliable, and their evaluations are objective, standard and transparent.
When we look at those who ho transparently disclose evaluation criteria, the following criteria come to the forefront:
Volume, traffic on order logbooks, order entry and cancellations, false volume creating attempts, APIs, licenses, if any, KYC and AML policies, country assessments, the method of acquiring the platform capital, team quality, commission fees, campaigns, and security.
Why do we need rating websites?
Digital assets trading platforms may render services anywhere around the world through a website. This means that they are subject to different legislative regulations in different countries. The platform where you choose investment may not always be based in a location that you can access on legal terms; that is, it may not be situated in a location that is in cooperation with the legal system to which you have access. As a matter of fact, some cryptocurrency trading platforms especially prefer certain countries notoriously known for having legal loopholes and being “tax havens”. When you encounter an issue with such platforms, you may not receive a response and you may not be able to cooperate with the local authorities of such countries to claim your rights even if you have legal experience.
Given that, all platforms must be evaluated based on objective and transparent criteria without leaving any room for doubt. If a rating website uses its experience and tools to evaluate all of the institutions in its scope according to the same criteria, such evaluation makes the data and information which are normally inaccessible by individual users visible. Thus, it can be considered as a valuable approach to prevent ambiguity.
Which are the commonly made mistakes in evaluations?
Just as there are rating websites that carry out rating based on objective criteria, there are also those which do not correctly reflect the volume of a platform and asks for money to publish the right volume and data when users contact them for their questions.
Another common manipulation is to list one of the competitors and ask for money to list the next one, especially in markets where competition is fierce.
Apart from asking for money for transparent rating conditions, there are other issues.
- Although the motive of the relevant rating institution may not necessarily be gaining profits, it may carry out hasty evaluations without contacting the relevant trading platform or ensuring access to reliable information and resources. In such cases, low scores, which do not reflect the reality, may be published prematurely.
- Such inaccurate ratings require the relevant platforms to contact the rating websites. Yet it is quite challenging to contact most of these websites. It may even be impossible to access them through the contact information published on their websites. Even if such mistakes are corrected with communication, inaccurate data that have already been published even for a brief moment could potentially mislead users.
- In some cases, the rating period may be from 1 to 3 months. However, this period is too long for the cryptocurrency market. Any failure to update the rating results within that period could also mislead users. During this period, new cryptocurrency listings on digital assets trading platforms and various innovations may be left out of the evaluations.
- In certain cases the rating website might show a volume of $1 billion for a given platform, but in reality the simplest transaction in that specific platform can be carried out by buying 1-2% lower than the market price or selling 1-2% higher than the market price.
- It is also common among rating websites to publish similar reviews about cryptocurrencies. Some websites are even known for publishing positive reviews about a specific cryptocurrency in exchange for money.
- Another challenge encountered in such processes is about security criteria. The review of rating websites has no significance unless security criteria are considered. However, the evaluation of security requires due diligence and expertise. Some websites may circumvent an evaluation which should be carried out with a multifaceted cyber-attack simulation such as a penetration test or stress test. They may even claim that the evaluation has been made remotely or they may declare that it has been carried out but represents no material evidence. This may in fact pose a threat to the user as it suggests a false sense of security.
- All these indicate that ill-intentioned or unqualified ratings done by the websites that have gone astray pose a significant risk that needs to be taken into consideration.
What are the basic requirements during the rating process?
The most essential requirements during the rating process are ensuring transparency and using the same criteria for each and every platform. Additionally, it is crucial that the rating website has proper tools and expert teams to review and interpret the data of the platforms from a technical aspect. A comprehensive rating process is technically costly. Still, people might find it reasonable to pay a high cost for a detailed rating. Therefore, institutions that rather choose to make profits by manipulating data and misleading people must be eliminated by the sector.
In this process, perhaps the most important thing is to audit the methodologies of rating websites. The fact that an institution that has never been audited keeps sharing its reviews and ratings is the biggest question mark here.
Scores are not the only criteria
So how should users approach information presented on such websites?
- First of all, the scores determined by rating websites should not be considered as the only evaluation criterion.
- Just as it is necessary to cross-check information on cryptocurrencies from various sources, the data published on rating websites must always be compared to the information shared by the platform itself. You can even make a comparison among different rating websites.
- Please note that paid social media followers, inflated trading volumes or fabricated numbers of website visitors constitute a part of the online world. Such fake moves may have a direct impact on the ratings.
- Given the limited nature of audit processes in rating as well as the dynamism of the cryptocurrency sector, you should consider the evaluation criteria, website history and background, up-to-datedness of data, etc. when reading an evaluation.
- From this viewpoint, rating platforms should always be available for evaluation. Do not consult the rating platforms that fail to keep up with up-to-date data.
- Finally, you may try contacting digital assets trading platforms directly for any criterion you doubt.
This information chaos will end as the sector becomes more transparent and regulations are adopted. Until then, however, the due diligence and care of the cryptocurrency sector, media organizations and rating websites will continue to play the most critical role in ensuring users’ right to access correct and reliable information.
Bu içerik en son 26 October 2022 tarihinde güncellenmiştir.