So Weiss Ratings finally got around to grading cryptocurrencies...unfortunately, but not surprisingly, their rankings suck. But before I delve into their shoddy analysis, you may be wondering "Who is Weiss Ratings? And why do I care what they think?"
First, didn't anyone tell you not to start sentences with the word "and".
And second, Weiss Ratings is...well in their own words: "Weiss Ratings, which began in 1971, is the nation’s leading independent rating agency, covering 55,000 banks, credit union, insurance companies, stocks, ETFs and mutual funds." So, obviously, given their expertise with BANKS and the like, they are clearly well situated to bring clarity to the cryptomarkets.
Again, in their own words: "The cryptocurrency marketplace is murky, overhyped and vulnerable to crashes. It desperately needs the clarity that only robust, impartial ratings can provide." Frankly I don't know how any cryptocurrency survived so long without them. To support their services I'm sure we'd all be happy to buy a one-year subscription for only $936 (WTF?!?)...
Seriously?! Seriously. As I read through their site the only thing missing was the "But wait, there's more..." you see in ridiculous infomercials. Their ratings have the legitimacy of a CryptoNick youtube video promoting BitConnect. Too harsh? Hear me out...
SO WHAT'S THE PROBLEM?
Nothing that they have done since 1971 qualifies them to grade cryptocurrencies. They're like a magazine marketing service circa 1993 trying to evaluate Google AdSense. If they want us to believe that their work in the industries that crypto is disrupting qualifies them to rank any coin, they need to prove it. How many of their analysts sold BTC at $19k? Hell, how many of them even knew what Bitcoin was in 2014?
Their modeling criteria is proprietary. You heard that right. They've given us their rankings, but they aren't willing to show how they got there. Now I get that financial modeling is often proprietary, but Weiss goes pretty far out there in the vagueness category. You should check out their model for yourself at:
https://weisscryptocurrencyratings.com/ratings/the-weiss-cryptocurrency-ratings-explained-15
But I'll do you a solid and summarize it briefly:
Step 1: They collect publicly available data that you can get off sites like coinmarketcap.com
Step 2: They organize that data using "proprietary formulas"
Step 3: They use the data in Step 2 to create "proprietary sub-indexes"
Step 4: They aggregate and grade the four indexes based by...well they don't say, I guess that's proprietary too
Step 5: They aggregate the four grades into one master grade by...you guessed it, something secret saucy.
You know what else was proprietary...this really cool "lending platform that developed a proprietary Trading Bot (think mathematical software)"... Ok, ok, I'll lay off the BitConnect analogies, but you get my point. For all we know the grades were determined by a class room full of blindfolded monkeys throwing darts. Maybe not, but the point is that if it were happening you would never know. See what I mean...
BIASED RESULTS
The only thing Weiss kind of gets right (in theory) are the four key indexes: Risk (basically volatility), Reward (comparable returns), Technology, and Fundamentals (eh...pretty much everything but the kitchen sink including developer participation, network security, market penetration....it goes on). You can read more about these from Weiss at the same link as above.
Now these are all excellent criteria when considering which, if any, coin you want to invest in. However, their analysis is clearly biased towards certain use cases. The top grade they gave to any coin is a B. There were two of those - ETH and EOS. Next up, was B-, there were three - NEO, ADA, and our beloved STEEM.
Notice anything missing? Now, these are clearly all great coins, (Disclosure: I have extremely modest amounts in all but NEO in which I have none) but none are true cryptoCURRENCIES. By that I mean they each have a purpose and use case apart from supplanting fiat currency. What does Weiss do again?
"Weiss Ratings, which began in 1971, is the nation’s leading independent rating agency, covering 55,000 banks, credit union, insurance companies, stocks, ETFs and mutual funds."
These guys clearly have a financial interest in the welfare of the banking industry. It along with all of its accouterments is how Weiss Ratings has made their living since 1971. Now I'm not saying they rigged the system on purpose against straight up cryptocurrencies, I'm saying they couldn't help it; being so entrenched in the current financial system, they may not even realize it.
THE GOOD NEWS
But even with their crappy grades, Weiss Ratings is actually helping the overall crypto market. The fact that they branched in at all is further indication of the mass adoption that is beginning to take place - and this only encourages it. Developments like the Weiss Ratings herald the further influx of institutional money and individual whales. Which is great news if you are holding any coins right now. This is true even if the Weiss Ratings are completely biased and inaccurate.
What do you think? Am I being too cynical about this?
Note that any quotes attribute to Weiss not otherwise cited can be found at: https://weisscryptocurrencyratings.com/ratings/frequently-asked-questions-61