Prices of bitcoin, the world’s largest cryptocurrency by market capitalization, were down 99% on crypto tracking site CoinMarketCap. But don’t worry, your bitcoins aren’t suddenly worthless. The extreme drop in prices was due to a glitch on the website, which surfaced during the early hours of Wednesday.
The glitch wrongly displayed cryptocurrency trading prices and was solved after nearly an hour. Pricing data has since come back to normal at press time, but data for all-time highs for cryptocurrencies remains faulty. For example, bitcoin’s all time high is still being displayed as $8.6 million on CoinMaketCap, which is far beyond its $69,000 peak in May 2021, as per CoinGecko.
Sites like CoinMarketCap and CoinGecko are gatekeepers of the crypto world for retail audiences. They track pricing and trading data on crypto exchanges in real-time – referencing the data against each other for a double-check – before publishing prices on their site.
This means if bitcoin is shown trading at $49,000 on CoinMarketCap, the figure is calculated by recording the actual trading prices on several trusted crypto exchanges.
But as with all things technology, mistakes do occur. A bug on CoinMarketCap wrongly displayed the prices of all cryptocurrencies early Wednesday, even as exchange data itself remained accurate.
This led to the price of bitcoin being displayed as high as $789 billion, giving it a market capitalization of $14.7 quintillion. Other large-cap cryptocurrencies like ether and cardano witnessed similar woes, reaching prices as high as $757,200 and $256 respectively. The real prices, at press time, are a more tamer $3,867 and $1.25.
The glitch caused the likes of Chainlink co-founder Sergey Nazarov to recommend decentralized alternatives to provide pricing data.
This recent glitch is exactly why blockchain applications and smart contracts need to use decentralized oracle networks like Chainlink, he said in a message to CoinDesk. Relying on a single oracle, or a single source of data, is a recipe for disaster that undeniably puts user funds at risk.
Also, some Decentralized Finance (DeFi) projects that use CoinMarketCap data halted their offerings as a measure to protect their mechanisms. Due to an error with the CoinMarketCap API, all DeFiChain Vaults have automatically been halted, for now, ensuring the safety of your loans, said DeFiChain, a bitcoin-centric lending service.
DeFi protocols rely on smart contracts for decentralized services like lending and borrowing, using pricing data from third-party services to ensure products offered to users are in line with market prices.
Meanwhile, CoinMarketCap addressed the glitch and detailed the next steps in a tweet this morning, Following the irregularities we observed on our platform this afternoon, despite the issue having been fixed, we will be rebooting our servers as a final step in accordance with our internal remediation plan.
Following the irregularities we observed on our platform this afternoon, despite the issue having been fixed, we will be rebooting our servers as a final step in accordance with our internal remediation plan. Apologies for the inconvenience.
— CoinMarketCap (@CoinMarketCap) December 15, 2021
However, pricing data for all-time high data on CoinMarketCap remains faulty at press time.