PALM BEACH GARDENS, Fla., Feb. 5, 2018 /PRNewswire/ — In the midst of a heated controversy over its C+ grade for Bitcoin, Weiss Ratings responds today to industry outrage with a 14-page report revealing key factors and data behind its rating.
One industry leader tweeted: “Any rating that doesn’t give Bitcoin an A has some screws loose.” Others said the Bitcoin’s C+ is “laughable.”
“For investors,” responds Weiss Ratings founder Martin D. Weiss, PhD, “an A rated crypto would be one that rarely crashes, and right now, there’s no such thing. But we do understand where developers are coming from. They tell us they don’t care about market fluctuations. They feel our ratings should reflect strictly the quality of their work and its relative success in the real world.”
Aiming to address both audiences, the Weiss model combines four sub-models: Risk and Reward, adapted from its stock and ETF ratings, plus Fundamentals and Technology, which are unique to cryptocurrencies. Here’s how Bitcoin performs on each:
Risk and Reward. Bitcoin investors have recently made less than altcoin investors, while continuing to experience the risk of extreme volatility.
Fundamentals. Due credit is given for adoption and security, but Bitcoin loses points on network congestion with just four transactions per second and high fees of about $10 per transaction. In addition, the top five miners control some 70% of total hashpower, also a negative.
Technology. Bitcoin lacks the governance needed for prompt upgrades and is falling behind in a rapidly evolving industry.
Another industry criticism is that Weiss overweights price volatility. “Not so,” he says. “Our model accurately reflects an inconvenient truth about the market’s extreme swings. But our ratings are continually updated. If prices stabilize or speed enhancements are rolled out successfully, an upgrade is possible.”
SOURCE Weiss Ratings