BLOCKCHAINDEFENDER

How a Lack of
Trust Affects
the Global Market
Capitalisation of
the Cryptocurrency
Industry
BLOCKCHAINDEFENDER

Executive
Summary
Blockchain is a technology synonymous with transparency,
traceability and trust. However, does trust really exist from
the perspective of an outsider looking into the blockchain
industry? Can protocols built upon trust truly evolve without
first gaining public trust?

An Overview of the
Market
“It takes 20 years to build a reputation and five minutes to
ruin it,” said billionaire investor Warren Buffet. “If you think
about that, you’ll do things differently.” In 2018, the global
Bitcoin and other digital currencies have only been around
for 10 years. Yet despite their chequered and often negative
market capitalisation
reputation (volatile and opaque, according to some critics), of the cryptocurrency
they’ve grown fast.

In early January 2018, the cryptocurrency market reached a

market fell sharply by
peak market capitalisation of nearly $800 billion. nearly 60% between
There are now more than 2,000 cryptocurrencies, January and
including Bitcoin, Ethereum and Litecoin (according to
CoinMarketCap), which are traded by millions of people on early February.
over 200 exchanges.

Experts predict that a small number of select

cryptocurrencies will eventually become globally adopted,
replacing traditional, government-backed fiat currencies.

Not bad for a new and unregulated financial asset. Yet 2018
has been a bad year for digital currencies, which have lost
three-quarters of their value since their peak at the start of
2018.

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 02
 Initially, the fall was attributed to South Korea’s
government, suggesting that it planned new regulations for
cryptocurrency trading. However, as time has passed it has
become more apparent that the fall cannot be attributed to
any one factor.
Politicians have likened the cryptocurrency industry to the
“Wild West” and said that it should be regulated to protect
the public.
In September 2018, the global market capitalisation of
cryptocurrencies fell further after media reports that Wall
Street financial institutions - including Goldman Sachs -
were shunning cryptocurrencies.
Yet despite persistent concerns about the long and
medium-term future of digital currencies, relatively little is
known about the link between their online reputation and
their financial value (market capitalisation).

$500B
Market Cap

$250B

$0
24H Vol

0
May 17 Aug 17 Nov 17 Feb 18 May 18 Aug 18 Nov 18

In this report, ReputationDefender will aim to answer the following questions:

Study How does market sentiment (the proportion of news/comments about digital currencies in the Google search
results that are positive or negative) affect a cryptocurrency’s market capitalisation?
1
Which established digital currencies have the most positive online reputations (and which have the worst)?

How does the online reputation of digital currencies vary by country or region?
Is the sentiment surrounding digital currencies more negative or positive in different countries?

What types of website is negativity most commonly published to?

Study
How does the online reputation of digital currencies compare to an established financial asset/market such as
2 traditional exchange markets?

Study
What impact does a crisis have on the price of a cryptocurrency?
3

Closing Summary
Finally, why does the cryptocurrency industry have a bad reputation and how can
cryptocurrencies combat this problem?

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 03
BLOCKCHAINDEFENDER

The Impact of Google Search Results

So, how does the prominence of content about a of offline material.
cryptocurrency or crypto exchange in the Google search
Therefore, if 1,000 investors read negative content about a
results affect its reputation?
cryptocurrency, wallet or exchange, we can safely assume
The higher a website ranks in the Google search results the that 750 (75%) of them will choose not to invest.
more clicks it will get and the more potential investors will
Also, it’s important to remember that a lack of positive
read about it.
search results has the potential to be just as damaging as
Our research analyses how users interact and form negative search results.
opinions on the information they find via a Google search
This knowledge helped us measure each cryptocurrency’s
for a cryptocurrency.
online reputation and compare it to their financial
In the online reputation industry, it’s widely accepted that performance (market cap).
75% of search engine users will choose whether or not
At a time when digital currencies are under growing
to engage with a brand, product or service based on the
scrutiny, how they manage their online reputation can
search results shown. However, this percentage is likely to
affect their growth and whether they attract enough
increase for digital and online services due to a lack
external investment.

Study
Market Trend, Market Sentiment & Market Capitalisation
1
ReputationDefender has conducted extensive research into the online reputation of thousands of digital currencies
- including Bitcoin, Ethereum and Litecoin - in four countries: The United States, Germany, Japan and the United
Arab Emirates. These countries were chosen because they have large and growing cryptocurrency markets, and
because ReputationDefender services blockchain clients in these countries.

The team at ReputationDefender used its expertise to analyse and quantify online sentiment about digital
currencies and track any connection with their financial performance.

First, ReputationDefender calculated the total search volume for cryptocurrencies based on Google AdWords data.

Then, using pre-determined criteria, online mentions of each crypto brand were categorised into positive, neutral
and negative categories.

Two pages (positions 1-20) of Google search results about each cryptocurrency were analysed in the research.

Negative online content included keywords such as ‘hack’, ‘scam’ and ‘Ponzi’ when they were used in articles about
a cryptocurrency.

Other types of negative content can include abusive comments about a cryptocurrency on an online forum or the
comment section of a news article, or on a company’s Wikipedia page.

Positive content included words and phrases such as ‘ICO’ (Initial Coin Offering), ‘ROI’ (Return On Investment),
‘sound investment’ and ‘milestone’.

This market sentiment was then cross-referenced with the market capitalisation of digital currencies.

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 04
 The Results of Our Analysis:
The graph below shows the digital currency market between 1st January 2017 and 31st July 2018

$800B

$700B

$600B

$500B

$400B

$300B

$200B

$100B

$0

Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 July 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 18

The graph tracks three metrics:

• The blue columns shows Google’s ‘trend data’, the anonymised data showing how often people searched for the term
‘cryptocurrency’

• The orange line shows ‘sentiment’ about digital currencies; whether online content about digital currencies was positive or
negative

• The red line shows the market capitalisation for the digital currency market

The first section, on the left of the graph, shows three things happening simultaneously :

• Google searches for digital currencies became more common (shown in Google’s ‘trend data’)
• Positive online sentiment about cryptocurrencies increased
• The global cryptocurrency market cap increased

In the second section of the graph (between September 2017 and December 2017) this trend continued.

However, between January 2018 and March 2018, the opposite occurred.

As search volume declined and online sentiment about digital currencies became much more negative, the market entered a
bearish trend and market capitalisation fell sharply as a result.

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 05
BLOCKCHAINDEFENDER

In the final phase, between April and July 2018, all three factors (trend data, sentiment and market
capitalisation) stabilised and plateaued.

An increase or decrease in the search volume of cryptocurrencies - and whether online sentiment about them is positive or
negative - directly correlates with market capitalisation.

By analysing a cryptocurrency’s online reputation, investors may be able to better predict its future financial performance.

Key Research Findings:

• There’s a clear correlation between an increase in

negative online sentiment about cryptocurrencies
and a fall in their market capitalisation.

• If there’s high search volume and positive sentiment,

a cryptocurrency’s market capitalisation increases.

• If there’s negative sentiment about a cryptocurrency

that becomes more prominent, market capitalisation
decreases.

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 06
Crypto Reputation by Country
Our research analysed online sentiment surrounding digital currencies (whether coverage is positive or negative) in four
countries: the United States, Germany, the United Arab Emirates and Japan.

ReputationDefender carried out this analysis using the native language of each country ( English, USA, German, Germany etc.).

As you can see from the graph below, there were significant differences in sentiment between the countries surveyed.

Negative Count Leaderboard

USA 55

Germany 48

United Arab Emirates 29

Japan 26

0 10 20 30 40 50 60

Sources of Negativity

The most common online destinations ReputationDefender found for online negativity towards
cryptocurrencies were:

• Cryptocurrency industry news websites

• Social media platforms and blogs
• Discussion forums e.g. Reddit, Bitcointalk
• Cryptocurrency review websites
• Cryptocurrency company websites and directories

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 07
BLOCKCHAINDEFENDER

Bitcoin’s Global Reputation

ReputationDefender analysed online sentiment towards Bitcoin in the US, Germany, Japan and the UAE.

The UAE had the most positive search results for Bitcoin, followed by Germany, the US and Japan.

The US had the most negative search results, followed by Germany, the UAE and Japan.

70%

60%

50%

40%

Impact 30%

20%

10%

0%
United Arab
USA Germany Japan
Emirates (Arabic)

Negative 37.25% 19.65% 10.70% 17.95%

Neutral 29.25% 16.50% 64.45% 23.85%
Positive 19.40% 27.20% 16.10% 35.35%
Possible Negative 14.10% 36.65% 8.75% 22.85%

United Arab Emirates (Arabic)

Japan

Count
Germany

USA

0 2 4 6 8 10 12 14

United Arab
USA Germany Japan
Emirates (Arabic)
Possible Negative 2 4 4 6
Positive 5 4 2 3
Neutral 6 6 12 7
Negative 7 6 2 4

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 08
 BLOCKCHAINDEFENDER

Leaderboards:
Best and Worst Performers
bitcoin cash 202.65% iconomi 240.55%

ethereum iota 196.70%

201.65%
ethorse 191.70%
bitcoin gold 201.30%
hacken 188.15%
cardano 191.55%
octanox 172.25%
droxne 174.95%
carvertical 149.95%
bitcoin 167.90%
litecoin 145.40%
digibyte 132.75%
power ledger 130.40%
carvertical 108.10%
omisego 119.50%
eos 100.45% zilliqa 109.55%

binance coin 98.10% binance coin 99.05%

litecoin 89.00% wetrust 98.85%

bitcoin 98.05%
tether 89.00%
substratum 97.30%
substratum 71.25%
digibyte 89.00%
iota 65.90%
neo 88.00%
octanox 60.10%
bitcoin gold 87.80%
ethorse 47.05%
ripple 84.05%
dash 45.90%
stellar lumens 83.80%
iconomi 44.20% droxne 81.80%

wetrust 41.90% zcash 80.80%

neo 34.15% cardano 73.40%

ripple stratis 72.45%

29.50%
dash 72.30%
stratis 26.10%
bitcoin cash 63.50%
zilliqa 10.60%
tether 57.85%
jio 7.35%
eos 55.00%
stellar lumens 5.75%
ethereum 53.00%
omisego 5.25%
naga 51.90%
naga 2.75% jio 36.80%
zcash 0.25% nxt 24.20%

0% 50% 100% 150% 200% 250% 0% 50% 100% 150% 200% 250% 300%

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 09
 Positive - Iconomi - Highest Number of Positives
Positives Split by Count

Crypto Market 17
Social Media 9 10.45%
2.75%
Blog 8 23.05%
Current Owned Direct Site 5
News 3 76.50% 3.00%
Forum 3
1 2
Review 2 3
Directory 1 17 3 23.05%

0 5 10 15 20 5
Positives Split by Impact

Crypto Market 76.50% 8

Social Media 55.95%
9
34.65%
Blog 34.65%
Current Owned Direct Site 23.05%
News 3.00%
55.95%
Forum 23.05%
Review 10.45%
Directory 2.75% Crypto Market Social Media Blog Client Owned Direct Site
News Forum Review Directory
0% 10% 20% 30% 40% 50% 60% 70% 80%

Negative - BitcoinCash - Highest Number of Negatives

Negative Split by Count

Crypto Market 14
Blog 8 2.50%
Pricing 6 2.50%
News
6.05%
4 10.55%
Exchange 4
11.30%
Encyclopedia 3
Social Media 1 1 1 1
91.15%%
Other 1
3
14 16.25%
Forum 1
4

0 2 4 6 8 10 12 14 16

Negative Split by Impact 4

28.15%
Crypto Market 91.15% 8 6
Blog 34.20%
Pricing 28.15%
News 16.25%
Exchange 11.30% 34.20%
Encyclopedia 10.55%
Social Media 6.05%
Other Crypto Market Blog Pricing News
2.50%
Forum Exchange Encyclopedia Social Media Other Forum
2.50%

0% 20% 40% 60% 80% 100%

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 10
BLOCKCHAINDEFENDER

Study Reputation Matters:

2 Crypto Exchanges vs Traditional Trading Exchanges
If an exchange isn’t trusted and respected, traders
will often choose to use a competing exchange.
Coins listed solely on these exchanges will potentially
inherit this negative sentiment and could therefore
underperform at crucial stages in their development.
Traders have increasing options and new exchanges
are appearing daily.
Crypto exchanges aren’t only in competition with
each other either; they also compete with more
established traditional financial exchanges and
trusted trading platforms.
ReputationDefender studied and compared the online
reputations of 10 cryptocurrency exchanges and
10 traditional exchanges in four countries: the US,
Germany, Japan and the UAE.
Our research found that there was far more negative
content in the Google search results about crypto
exchanges than traditional exchanges.

Traditional Exchanges:
Solid Reputations, Well Managed
Traditional exchanges have more control over their online reputations. This control is largely driven by positive ownership such
as official exchange websites and social media channels. Over one third (34.38%) of the content is officially owned.

Our analysis also shows that traditional exchanges benefit from a healthy volume of positive commentary from third party
websites. Nearly 30% of the online content we studied can be categorised as positive in sentiment.

34.38%

29.50%

19.63%

11.50%

5%

Negative Potential Official Neutral 3rd Party

Negative Positive

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 11
In comparison, crypto exchanges seem to be struggling
to protect and improve their online reputations.
A major contributing factor to this is the additional channels of negativity which traditional exchanges do not suffer from, such
as social media, blogs and pricing websites.

This lack of control has resulted in potential investors and customers being faced with 275% more negative coverage about
crypto exchanges than they would about traditional exchanges.

In addition, crypto exchange ownership of search results is just 17.75%, which is nearly half that of traditional exchanges.

23.50%
19.50%
18.75% 20.5%
17.75%

Negative Potential Official Neutral 3rd Party

Negative Positive

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 12
Where Is Most of the Negative
Sentiment Coming From?
For traditional exchanges, just over half (51%) of negativity comes from review sites, which is typical for a consumer industry.

Encyclopedia 27%

Review 51%

Forum 1%
Market Specific 4%

News 13%

Other 4%

Negative content about crypto exchanges comes from more sources than negative content about traditional exchanges.

Crypto industry websites account for about one quarter of negative search results, followed closely by blogs, forums and social
media channels, which together account for 23% of overall negative content.

In some ways, crypto exchanges have become a victim of their own success. Their rapid growth and excitement about their
future means that they are subject to far more scrutiny from bloggers, crypto enthusiasts and the media than the traditional
market is.

Social Media 8%

Review 20% Blog 10%

Crypto Market 24%

Pricing 16%

Other 2% Directory 1%

News 8% Encyclopedia 6%
Forum 5%

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 13
 Study Case Study: A Crypto in Crisis
3 ReputationDefender analysed the online reputation of a cryptocurrency which faced a crisis in 2018 after it was
hacked.

Our research was based on a before and after crisis analysis of the brand search term in five countries: the US,
the United Kingdom, Japan, the UAE and Germany.

Before Crisis
Before the digital currency’s crisis, there was little to no negative content (1.3%) published about it in the five countries we analysed.

In fact, the cryptocurrency in question had one of the better online reputations within the industry.
The amount of positive content shared online about the company (16.4%) was significantly better than the industry average.

37.5%
34.2%

16.4%
10.8%

1.3%

Negative Potential Official Neutral 3rd Party

Negative Positive

After Crisis
Immediately after the crisis was made public, there was a big increase in negative sentiment (up 22.1%) about the company in
five countries. At the same time, positive content about the digital currency decreased by 14%.

43.2%

30.6%

23.4%

2.4%

Negative Official Neutral 3rd Party Positive

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 14
BLOCKCHAINDEFENDER

East vs West
Interestingly, there was a significant difference in how the crisis was perceived in different parts of the world.

There was a huge swing in negative sentiment about the currency in the West compared to the East.

52.9%

40.65%
32.8%
30.95%
28.4%

14.3%

GOOGLE UNIVERSAL UK GOOGLE UNIVERSAL JAPAN

72%

47.55%

29%
22.75%
21.2%

5.25%
2.25%

GOOGLE UNIVERSAL USA GOOGLE UNIVERSAL UAE

Negative Official Neutral 3rd Party Positive

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 15
Negative News Sources
We analysed the search results for the digital currency in question before and after the crisis. The charts below break down
and categorise the sentiment of the sites in the search results.

In one week, we can see how positive search engine ownership decreased from 22% to just 3%. On the other hand, negative
search engine ownership increased dramatically from 2% to 28%.

BEFORE CRISIS AFTER CRISIS

2% 3%
9%
40%

28%
31%

22%

27% 38%

Negative Neutral Official 3rd Party Positive Potential Negative

By breaking down negative search engine ownership we can see that:

20% of negative sites have been categorised as crypto market news e.g. cryptocompare.com

5% of negative sites have been categorised as mainstream news e.g. Bloomberg.com

3% of negative sites have been categorised as forums e.g. Reddit.com

The combined average search volume for the brand was 250,000 searches per month. The increase in negative content about
the brand may have deterred nearly 65,000 potential engagements.

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 16
BLOCKCHAINDEFENDER

Coin Price During the Crisis

How did the crisis affect the coin’s trading price?

Our analysis of the week during the crisis shows the devastating effect a crisis can have on the market value and share price of
a digital currency.

The coin price fell sharply overnight and by about one third during the week, resulting in the loss of tens of millions of dollars
from the company’s value.

150 M $3.00 0.0004

135 M $2.70 0.0004

Price (BTC)
Price (USD)
Market Cap

120 M $2.40 0.0003

105 M $2.10 0.0003

90 M $1.80 0.0002

BEFORE CRISIS AFTER CRISIS

Market Cap: 160,313,254 USD Market Cap: 104,760,132 USD

Price USD: 3.20 Price USD: 2.05

Price BTC: 0.00047549 Price BTC: 0.00032773

IMPACT

Market Cap: -55,552,520 USD

Price: -1.15 USD

Price BTC: -0.00014776

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 17
Closing Statement
As a result of ReputationDefender’s research, it is clear that
potential professional investors and the public are researching
blockchains, cryptocurrencies and tokens online. They’re making
investment and adoption decisions based on what they find.

Why Does the Blockchain Industry Have Reputation Issues?

The blockchain industry has earned a bad reputation as a result of the numerous scams, hacks and shady characters operating
within it. There is a continuous spread of misinformation, commonly referred to in the space as fear, uncertainty and doubt
(FUD). This has resulted in a severe lack of trust.

The industry has been tarnished by the very problems it sought to eradicate in the world of finance, and as a result the public
has been burnt. It is essential that investors regain confidence to achieve mainstream adoption.

How Can Cryptocurrencies Combat Reputation Issues?

It is crytical for cyrptocurrenices to focus on building a credible and durable online reputation. A shift in reputation sentiment
– or a PR crisis which damages your brand online – can devastate the price a coin is trading at and deter adoption.

Engagement

Blockchain projects pride themselves on being community driven and funded. For this reason, it is essential that community
members feel like they are active participants of the project and that their voices are heard.

To achieve this, any respectable blockchain project should have a clear and robust social media strategy that interacts and
engages with its audience.

A Global Approach

The majority of blockchain projects aim to be adopted internationally. A key part of this is to interact with the target audience
in their native language, adhering to cultural practices and differences.

85% of search engine users expect to see information in their own language before deciding whether or not to engage
with a brand.

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 18
BLOCKCHAINDEFENDER

Being Heard for the Right Reasons

Due to the prolonged bear market, many blockchain projects have halted or slowed down their marketing efforts. Doing this
can be extremely detrimental to the success of a project and can lead to the collapse of a coin.

Cryptocurrencies must broadcast their news, updates and progress in a clear and concise manner to authoritative and trusted
industry websites. This not only helps to cement and maintain a positive reputation for the project; it also makes it stand out
from the competition as a respectable project with a long-term vision.

BlockchainDefender by Reputation Defender

BlockchainDefender is a new product offering from ReputationDefender that offers a tailored reputation management
solution for the cryptocurrency and blockchain industry.

Your brand search results are your online shop window. They define what potential clients think about you within seconds.
Current clients, associates, prospective business partners, employees, investors and your network are measuring you against
what appears online, and what they discover can be the difference between losing or winning their trust. Don’t let critical
articles, misleading blogs and outdated news ruin your reputation.

By creating a global framework of relevant content about your business hosted on new and established assets in multiple
languages, ReputationDefender will promote material which will limit the coverage and visibility of any harmful information.

BLOCKCHAINDEFENDER

Industry Expert – Opinion

Pascal B van Knijff, CEO & Founder Future of Trust

Proposition Builder and International Keynote Speaker

Trust is often time perceived as an intangible property; it is hard to

quantify and prove, yet it is one of the most important pillars in the
marketplace today. However, this industry report does a good job of
visualising and even quantifying trust.

Throughout this report it is very interesting to see how the

cryptocurrency and blockchain industries have failed to deliver
the solutions to the very problems they sought to eradicate.
Another important takeaway is the need for blockchain, token and
cryptocurrency projects to have a long-term vision and understand
the need for a post-launch strategy. As the industry matures and
more organizations adopt blockchain propositions, it is important to
demonstrate what trust looks like.

As a cryptocurrency industry professional, token proposition

builder and international speaker, I want to encourage every reader
to include the key learnings and insights of this report in their
communication and online strategy. I am certain we will!

How a Lack of Trust Affects the Global Market Capitalisation of the Cryptocurrency Industry blockchaindefender.io 19