The finger-pointing has already started after data glitches resulted in the brief display of astronomical gains for many cryptocurrencies late Tuesday.
Crypto.com Chief Executive Kris Marszalek blamed popular data provider CoinMarketCap.com and said it was working to remove the “unreliable price feed” from its site. Coinbase Global Inc. President and Chief Operating Officer Emilie Choi also cited bad pricing data from CoinMarketCap.com, which is own by rival exchange Binance.
The incident was “indicative of an emerging industry,” Choi said during an interview Wednesday at the Bloomberg Technology Summit. Coinbase, the largest U.S. crypto exchange, has more than 70 million customers worldwide.
While the exact cause of the glitches is still unclear, some industry members point to the possible role of API, or application programming interface. Websites use APIs to talk to each other, and a website can make its APIs available so other websites can embed their data, for example.
Coinbase didn’t respond to questions on how much its pays for CoinMarketCap’s data feed. Crypto.com declined to comment.
Technical glitches have long plagued the cryptocurrency world, with many exchanges often having trouble processing transactions during period of high trading activity. The feature of anonymity that has been a selling point since the development of cryptocurrencie has also made it difficult to resolve hacks and thefts.
“The perception here is it happens quite often to the level that people start to get impatient,” said Owen Lau, an analyst at Oppenheimer & Co. “While people are still looking for the root cause, I won’t be surprised to hear that people would blame the client facing app like Coinbase even if the problem comes from the data supplied by the third party.”
You don’t have to tell us anything — we are already working on removing @CoinMarketCap’s unreliable price feed from our product.
— Kris | Crypto.com (@Kris_HK) December 15, 2021
“For these markets to be perceived as credible by institutions and regulators, we need reliable and transparent data sources,” said Nic Carter, who co-founded Coin Metrics, a crypto data platform.