There are already over 30 digital currency exchanges operating worldwide with new ones being launched everyday. It is a very competitive landscape that evolves on a daily basis. That is where we come in, we analyze the significance of each exchange and only use the legitimate ones in our calculations.
The factors that lead to our decision on whether or not to include a specific exchange are:
Its not a perfect science and we make the decision based on our own best judgement. If you feel an important exchange is missing from an index, email me at firstname.lastname@example.org and I will look into it personally.
Since digital currency exchanges are competing with each other for users, many have no trading fees or have implemented a maker/taker fee structure. A maker/taker structure incentivizes large players to place buy orders and sell orders on an exchanges order books in return for negative fees. Essentially the exchange is paying for large coin holders to provide volume on their exchange. On exchanges with no trading fees, automated trading bots execute large amounts of small trades attempting to profit on even the smallest price movements.
Both of these fee structures result in inflated volume numbers, and make calculating a weighted average problematic. Logic dictates, that in a free market, exchanges will constantly compete to inflate their volume numbers as much as possible, mainly through the two techniques explained above. For that reason, we have chosen not to use a weighted average for our indices.
Please let us know your thoughts on our process and any suggestions you might have, in the comment section below.