Weiss Ratings has brought out an explanation of its C+ grade for Bitcoin after the low rating sparked the ire of some investors.
Numerous rating agencies deal with the stock market, assessing the future outlook of a particular segment, ETFs, or listed companies. Weiss Ratings recently announced the launch of the first-ever cryptocurrency rating service, which takes a look at the top 70 digital currencies and gives them a grade according to their market potential.
Martin Weiss, the founder of Weiss Ratings, said in a Monday post that the issue of Bitcoin’s volatility has yet to be addressed.
“As we have stated from the outset, the Weiss Ratings are designed primarily for individual investors who are new to cryptocurrencies but willing to take the risk of extreme price volatility,” he wrote.
Based on the grading system employed by most agencies, a C means that an investment is complete and utter garbage. However, the Weiss index uses a scale going all the way down to F, which means that the C+ rating puts Bitcoin in the upper-third of “fair.”
This particular rating is calculated on the basis of four factors, two of which measure risk versus reward.
“Despite rapid appreciation in 2017, Bitcoin has been losing ground to competing altcoins and currently ranks low,” Weiss wrote in reference to Bitcoin’s reward component.
“Given the extreme volatility of recent months, it should come as no surprise that Bitcoin does not achieve a stellar grade on this index either,” he said on the matter of risk.
Not everything looked negative from Weiss’ perspective. Where its underlying technology is concerned, Bitcoin “does well with regards to the security of its blockchain” although it continues to have problems with scalability, Weiss wrote.
He compared Bitcoin to the first cell phone, which was clunky and immensely challenged in terms of battery life but still sparked a revolution.
In some way, it appears that Weiss sees Bitcoin as a stepping stone to better things in the future.
The cryptocurrency market is highly diverse, and some altcoin might dethrone Bitcoin in the years ahead.