The Dark Side of Crypto Exchange Ratings: What You're Not Being Told

A high rating on a crypto exchange review doesn't necessarily mean it's a reliable choice for your transactions. In fact, the number of stars can be misleading due to how ratings are calculated and presented.

Trustpilot, a platform that aggregates reviews from various sources, uses a formula to calculate its TrustScore. This formula takes into account factors such as time span, frequency, and a Bayesian average. The calculation also includes the value of 7 reviews worth 3.5 stars each, which means that providers with fewer reviews start from a balanced position.

This prior weighting can be a problem when comparing two providers with different review counts. For example, a provider with 150 reviews may have diluted its prior, while a newcomer with only 20 reviews is still heavily influenced by it.

Another issue is recency weighting, which gives more weight to newer reviews and less to older ones. This means that the score reflects roughly the last stretch of collection activity, rather than the current state of the provider's services.