Bitcoinist spoke with On Yavin, CEO of Cointelligence, an educational and data platform for the cryptocurrency space that will soon launch the first-ever cryptocurrency exchange rating system in early 2019.
A cryptocurrency exchange rating system is perhaps overdue for the crypto space given the history of hacks, scams and regulatory challenges that present barriers to mass adoption.
“We didn’t see someone else doing ratings for exchanges,” says Yavin. “We think it’s very important for the industry.”
So will your favorite exchange pass the grade? What are the criteria? What exchanges should users stay away from? Let’s find out more.
‘Nothing Can Change Our Ratings Except For Actual Improvements’
Bitcoinist: First, what is Cointelligence all about?
On Yavin: Cointelligence was founded in 2017 as the data layer and central nervous system of the crypto economy. Our mission is to expedite mass adoption and to clean up the crypto space. We are accomplishing this by bringing valuable information to the masses using our data research and analysis that is focused on ICOs, STOs, coins, and exchanges and by hunting scams.
Why did you decide to launch an exchange rating system? Is there anything similar already on the market?
In order to protect crypto investors/traders, it’s important to perform ratings for exchanges so that they will know what to expect. We want to make sure that investors/traders are avoiding bad exchanges, are aware of exchanges that have experienced too many hacks in the past, and are aware of problems with exchanges such as, difficulties with withdrawing funds, bad customer service etc. There is not even one professional rating system for exchanges that we are aware of at the moment.
When will it launch?
We are aiming for January 2019.
Exchanges are obviously very interested in boosting their public image. How can users be certain that Cointelligence remains objective and impartial when publishing ratings?
Over the last year, we have continued to prove that NOTHING can affect our ratings. They are not done based on a feeling but based on an invasive and mathematical system that expresses results in an absolute rating, which is based on facts only.
NO ONE and NOTHING can change ratings except for actual/factual improvement on the exchange itself. We have been approached by ICOs many times asking us to improve their rating for payment and time after time we said NO.
We will do the same with exchanges. Our raters are completely anonymous and nobody knows who they are. Our raters cannot choose the companies that they rate as the companies are chosen at random by Cointelligence’s head of research.
We have three levels of quality control: the rater, the supervisor who checks the rating, and the head of research who checks the supervisor to make sure that nothing went wrong and that the rating is 100% accurate.
It is important to note that Cointelligence is totally self-funded and NO ONE can influence the owner or the team because of personal agendas.
What are the main criteria used to rank exchanges? What kind of cryptocurrency exchange rating system is used?
The system is generally based on 1-10 scores, the main criteria are:
- Accessibility and Usability – We create an account within the exchange with which we decide how simple it is to use the exchange. We also check how fast their support team responds. Another important criterion is their methods of payments, as in cash deposits, credit cards etc.
- Financial benefit – We calculate and come to an educated estimate how much a user benefits from using the exchange. In addition, we look at which types of insurance they provide and how high of a cost it covers, what their commissions are, which Fiat currencies are supported, and many markets and tokens are available, and the trading volume.
- Team – We assess the exchange’s team and their ability to sustain their exchange for a long period of time as well as their ability to keep it protected. We look at how experienced the CEO is – if they have anyone that has a background in fraud/risk management and how experienced he/she is, as well as the experience of other team members.
- Risk – We evaluate how risky it is to use a certain exchange based on several criteria such as past hacks, their insurance system, regulations, security protocols, and the withdrawal process.
How often would the rating be updated? And do you also take feedback from the exchange users themselves?
Users are welcome to send their feedback, but it will be an exercise in futility as we only change scores based on actual improvements. We will update the ratings every 2-3 months.
What would a perfect exchange look like? Is there any exchange that comes close today?
It would be too arrogant to call any exchange perfect, as we don’t believe there is a perfect product.
Coinbase/Coinbase pro is close to perfect, as they are fully regulated. In addition, they are among the few that provide insurance for users’ funds in the case of security breach or loss of funds for users.
Are there exchanges that users should absolutely stay away from?
One exchange that we would recommend people to stay away from are exchanges like Hitbtc, where the owners are unknown and many users have claimed to have lost access to their funds.
If the exchange owners or team are hidden/unknown or the exchange is registered in a “gray area”, we would recommend users to not leave their funds in that exchange when they finish their trading actions, and preferably, to not even use such exchanges.
Do you also include Derivative platforms like BitMEX? What about institutional exchanges such as Six and NASDAQ that are rolling out cryptocurrency products?
Currently, our system is adapted for crypto focused exchanges, decentralized exchanges, and derivative platforms.
There are quite a few exchanges who wash-trade and create fake volume via bot trading. Would your findings be able to confirm this and would this be addressed in your rating?
We are able to identify such trading pairs, yet checking hundreds of trading pairs on each exchange won’t be realistic in the near future though we are looking at ways to make this possible.
Where do you see cryptocurrency exchanges 1-5 years from now?
We can hope that they will be the main form of currency exchange, just like a digital version of today’s stock exchanges. Everyone should have a personal code that allows them to operate and no one will have to carry identification on them, be banked, or have any restrictions on them when it comes to trading.
Will you use/not use an exchange based on these ratings? Share your comments below!
Images courtesy of Shutterstock