The team at BlockchainDefender recently studied the trust associated with the cryptocurrency market and how it affects market capitalisation of cryptocurrencies. The resultant report looks at variations in reputation by cryptocurrency and by country, comparisons between the reputations of traditional exchanges and those of crypto exchanges, and the impact of a crisis on a cryptocurrency.
Reputation Management Is Different for Traditional and Crypto Exchanges
Among the findings of the BlockchainDefender report is the fact that the state of online reputations and the process of managing them is very different for traditional exchanges and crypto exchanges.
BlockchainDefender reports that traditional exchanges have a high degree of control over the online sentiment towards them. This is largely driven by the fact that over a third of online content related to traditional exchanges is officially owned by the exchange. This includes things like the official website and social media channels. Traditional exchanges also have a great deal of positive commentary from independent websites, with almost 30% of content analysed being positive as opposed to negative, official, neutral, or potentially negative.
In contrast, cryptocurrency exchanges struggle to improve and protect their online reputations. According to the BlockchainDefender report, there is 275% more negative coverage concerning crypto exchanges compared with traditional ones. One factor is that crypto exchange ownership for search results is only 17.75%, almost half the figure for traditional exchanges. With less control over online content, there is less control over overall sentiment.
The sources of negative content also vary for traditional and crypto exchanges. Crypto exchanges tend to receive negative content from a larger range of sources than traditional exchanges.
Other Trends of Note in the Report
In addition to the comparison of traditional and crypto exchanges, the BlockchainDefender report confirms that more online positive sentiment regarding a cryptocurrency leads to greater market capitalisation for that crypto. The report also concludes that high search volume and positive sentiment has a strong correlation with increased market capitalisation.
The report also notes some geographic differences in overall sentiment regarding the crypto industry. For example, of the four countries examined the United States has the most negative search results regarding Bitcoin, while the United Arab Emirates has the most positive search results.
The final section of the report outlines the impact of a cryptocurrency hack or other crisis on market capitalisation and price, with clear drops in each. BlockchainDefender concludes with some final thoughts on the challenges of managing a cryptocurrency’s reputation and a brief look at how to overcome these challenges.
You can view the cryptocurrency trust report on SlideShare, or download a copy of the report here.