Earlier today the news that Binance is acquiring Coinmarketcap hit the crypto market like a meteor. The price is, allegedly, $400 million.
If you taught that Justin Sun went over the top by acquiring a simple Steemit account, wait while you hear what Binance’s Changpeng Zhao has in mind. According to The Block, Zhao’s company, Binance is acquiring the biggest crypto data aggregator, Coinmarketcap (CMC) for $400 million.
If there is truth to these rumors, many questions naturally arise. Especially since Coinmarketcap was the first choice for crypto investors when relevant info is concerned. If you don’t understand the importance of this takeover, read on.
Binance Acquiring Coinmarketcap is a Part of a Bigger Plan
On January 29th, Zhao published a public letter to Binance users in which he states:
As the saying goes, when you can’t beat them, buy them. And this is definitely true for all of our acquisitions. When we identify top talent with a top product that we can’t beat, and the teams share common values, a merger makes sense in most cases.
Binance made no less than 9 full acquisitions in 2019, with only a small number of them being publicly announced so far. There are always a number of deals being discussed at any given time, and there are 2 that I am very excited about specifically. We will announce them in due time.
Reading CZ’s announcement, it is clear that Binance has aspirations to buy other successful crypto-related projects. Therefore, it is highly possible that Coinmarketcap is one of those two acquisitions Zhao was so excited about.
Since CMC had 207.2 million visitors during the last 6 months, it seems that Binance’s main objective is to enhance its global influence. For comparison purposes, during the same period, Binance had “only” 113.8 million visitors. Therefore, looking at things from that perspective, it makes sense for Binance to go through with this acquisition.
The obvious reason people are skeptical is that, among other things, CMC should be providing:
- unbiased exchange traffic data
- unbiased coin metrics
Once Binance completes the takeover, bot of these functions will be seriously compromised. Thus, a good portion of the community decided to use Twitter to express their concerns.
Yet, there are some who see this as a smart business move.
What’s Wrong With Binance Acquiring Coinmarketcap?
Legally? Probably nothing.
However, cryptocurrencies should be all about the decentralized environment. At the moment many more investors use centralized exchanges than their decentralized counterparts. This is the first part of the problem. Because, when you entrust your cryptocurrencies with a 3rd party, effectively, you don’t control your private keys. Hence, you may as well not be the owner of those coins. If you don’t understand the problem, read about what really caused the Steemit community Vs. Justin Sun commotion.
The second and far more bothersome thing is that Binance is a centralized exchange with its own cryptocurrency, Binance coin (BNB), as the pivotal point of trading. Therefore, once Binance completes the move, the situation with the trustworthiness of CMC data will never be at the same level.
Imagine reading the pro-right-wing political party newspapers and believing their public opinion poll which states that that same right-wing party Enjoys a 77% public support. If you can’t envision yourself believing such a source, the question is, why would you believe CMC if they get assimilated?
Or in simpler terms, morally, this is a huge conflict of interest.
However, CZ is not to blame. His vision of crypto was never decentralized. Otherwise, he would never develop a centralized exchange that deals with the “competition” through takeovers. And here is the list of Binance’s biggest acquisitions to date:
- Trust Wallet – wallet provider
- DappReview – blockchain data startup
- WazirX – Indian cryptocurrency exchange
- JEX – derivatives trading platform
The Geek-Mogul Comparison. Or, Why are People Differentiating Sun and Zhao?
Not so long ago, when Justin Sun made his move of the year by acquiring the founding account of Steemit, the community went berserk. It went to such lengths that his share of STEEM was locked out of witness voting by a soft fork of the STEEM blockchain. Sun looked like a tyrannical despot who puts his financial interests above the decentralization of the blogging platform. And rightfully so.
Meanwhile, Sun’s takeover of Steemit was fully backed by Changpeng Zhao’s Binance exchange. Wait, “backed” is an understatement. In fact, Binance used their users’ STEEM to vote Zhao back to power after the mentioned soft fork (read the part about coins on centralized exchanges again).
Once CZ realized the scale of dissatisfaction among Steemit users, he quickly waltzed over towards the full-scale confusion act by stating that he reached some wrong conclusions. Naturally, he couldn’t have known that it was wrong to use Binance users’ funds to help his fellow Sun. How could he?
Nevertheless, the Steemit community was forced to fork off the STEEM chain and establish Hive. Of course, Binance seemingly switched sides and backed the new project.
Or did CZ really switched sides?
CZ did exactly what Sun expected him to do. Binance helped Sun. Sun fulfilled his intention. In the aftermath, Binance listed the new coin along with providing backup for the fork. As a result, his centralized exchange got some new users along with a few more bucks from trading Hive cryptocurrency.
After the drama ended, Justin Sun remained the antagonist of the story while Zhao’s public image remained as SAFU as it gets. Yet, facts can’t be changed. And if Binance really acquires CMC, Zhao will finally reveal what should have been clear from the very beginning – decentralization is the last thing on his mind. The only question which yet remains is why do investors and crypto users see him as any different than Justin Sun?
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