Half of the volume of transactions carried out in bitcoins will be fake. Cryptocurrency exchange platforms are putting forward unreliable numbers, according to a study.
Our colleagues from Forbes analyzed 157 cryptocurrency exchanges. This survey was aimed at determining whether the volume of bitcoin transactions displayed by the exchanges is actually true. For the media, this is not the case at all.
As of June 14, 2022, Forbes has recorded $128 billion in daily transfers worldwide. Combining the data of the sites for the same date, the American media get a result of 262 billion dollars.
“More than half of all reported trading volumes are likely fake,” Forbes said in a report.
Please note that there is currently no universal method for determining the volume of transactions in an ecosystem. Reputable firms in the sector, such as CoinMarketCap, CoinGecko or Messari, show vastly different volumes. Experts also always clarify that these are only estimates.
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Why exchanges inflate the volume of transactions
According to Forbes, many exchanges show inaccurate trading volumes. The media does suspect some players in the ecosystem of inflating volumes to mimic high demand. As such, exchanges will seek to encourage “potentially more authentic exchanges”. A large number of transactions reassures potential users.
Platforms will practice fictitious trading. This practice involves buying and selling the same asset at the same time. The trick is to inflate the trading volumes, but these trades are fake. During the process, the cryptocurrency is not exchanged through the blockchain. It is also reported that some fake transactions are carried out by trading bots. Fish trading complicates the work of analyst firms in the sector that rely on stock data.
Forbes clarifies that mostly unregulated platforms cope with the real volume of transactions. In particular, this applies to BitCoke, an exchange based in Hong Kong and very popular in Argentina. Based on the number of visitors to the site, the report concludes that BitCoke is lying about actual trading volumes. However, the volumes displayed by top exchanges like Binance also seem to be exaggerated.
The volume of real transactions will grow
This is not the first time that analysts have singled out the volume of bitcoin transactions. In 2019, a study by San Francisco-based asset manager Bitwise assured that “nearly all of the volume” claimed by the exchanges was fake. The bit value then pushed the 95% false volume figure.
If the estimates of Bitwise and Forbes are correct, then there has been a strong increase in the volume of real transactions over three years. As the price of digital assets rises, more and more users are switching to cryptocurrencies. Currently, 200 million people around the world are already dealing with digital currencies. According to a study by the Boston Consulting Group (BCG), the billion mark will be passed by 2030.