The latest highly controversial Weiss Cryptocurrency Ratings have been released and with regards to “Technology/Adoption” (capabilities of the code, as well as real world performance/adoption), Cardano and EOS have come out on top (beating the other 91 cryptocurrencies covered by the report).
Cardano (Ada) and EOSIO (EOS) both managed to get an “A-” grade, leaving NEO (NEO), Ripple (XRP), and Steem (STEEM) in joint second place (“B+” grade), and Bitcoin (BTC), BitShares (BTS), Ethereum (ETH), IOTA (IOTA), and Stellar Lumens (XLM) in joint third place.
Financial ratings agency, Weiss Ratings, which was founded in 1971, started covering cryptoassets (tokens and coins) on 24 January 2018, when it launched a new website called Weiss Cryptocurrency Ratings. The idea was to provide a weekly paid report that gave an overall rating for each cryptocurrency (initially only 74 were covered), as well as two component grades: an “Invest Risk/Reward” grade and a “Technology/Adoption” grade. Grades range from A+ (best) to F (worst).
Weiss Ratings says that these grades should be interpreted as follows:
- A: “excellent”
- B: “good”
- C: “fair”
- D: “weak”
- E: “very week”
- F: “failed” or “fraud”
Here is what the three types of ratings mean:
This is “a comprehensive, balanced overview of all factors, based on a complex algorithm — not an average of the component grades. When making choices, investors should focus primarily on this overall rating. Caveat: Although based exclusively on a disciplined, objective review of hard data, in the final analysis, each rating represents our opinion — not a guarantee of future outcomes.”
Investment Risk/Reward Rating
Risk shows “the downside potential investors should be aware of, reflecting price volatility and magnitude of recent declines” while Reward indicates “profit potential based mostly on price momentum and recent returns to investors”. The combined grade for investment risk and reward might be a useful tool for short-term trading.
The two components here are Technology, which looks at software capabilities, taking into factors such as “level of anonymity, sophistication of monetary policy, governance capabilities, ability or flexibility to improve code, energy efficiency, scaling solutions, interoperability with other blockchains,” and Adoption, which takes into factors such as actual real world performance (e.g. in terms of transaction speed, network security, and decentralization of mining) and developer/enterprise/public adoption. Here, the combined grade for technology and adoption could be a useful tool for long-term investing.
Here is how Cardano and EOS scored in each of these categories:
To give you an idea how Cardano and EOS did compared with some of the other popular cryptocurrencies, Bitcoin, Bitcoin Cash, Ethereum, Iota, Litecoin, Monero, NEM, Ripple, and TRON got the following grades in these three categories:
- Bitcoin: “B-“; “D+”; “B”
- Bitcoin Cash: “C-“; “C-“; “C-“
- Ethereum: “B-“; “C-“; “B”
- Iota: “B-“; “C-“; “B”
- Litecoin: “C+”; “D+”; “B-“
- Monero: “C”; “D+”; “C+”
- NEM: “C+”, “C-“; “B-“
- Ripple: “B-“; “D+”; “B+”
- TRON: “B-“; “C-“; “B-“
It is interesting that when these ratings were launched in late January 2018, the overall ratings for Bitcoin, Ethereum, Cardano, EOS, and NEO were “C+”, “B”, and “B-“, “B”, and “B-“, meaning that, for example, Bitcoin has gone from “C+” to “B-“, while Cardano has gone from “B-” to “B”. However, it is important to note that these ratings are updated weekly, and traders/investors should expect frequent upgrades/downgrades.
At the time these crypto ratings were first launched, Weiss Ratings founder Dr. Martin D. Weiss was interviewed on CNBC, and made the following comment:
“What we’ve done is build a model, a computer model, that looks at cryptocurrencies from many different angles, and provide a reasoned rigorous research that investors need so desperately right now in this space.”
When Ari Paul, the chief invetsment officer at crypto investment firm BlockTower Capital heard about these ratings, he told CNBC via email:
“Weiss’ cryptocurrency ratings are a great example of the ongoing institutionalization of the cryptocurrency industry and a healthy addition… Their rating of Bitcoin suggests a misunderstanding of the core value proposition of cryptocurrency, however, as they seem to overvalue transaction capacity, and undervalue protocol stability, security, and decentralization.”