Bitcoin did not fare well, claiming an average grade, as did most cryptocurrencies. Surprisingly, coins such as EOS, Cardano, NEO and Ethereum received much higher grades than Bitcoin. It’s really strange how projects like Cardano, which essentially exist as only a whitepaper, can attain a higher grade than the oldest and biggest digital currency, Bitcoin.
The crypto community is one where there is a lot of vehement support for certain coins. Bitcoin, being the biggest and probably most popular, obviously has a large contingent of die hard fans who think it cannot be bested. However, that view must have taken something of a knock as Weiss Rating, a supposed independent securities rating agency, handed out its grades for a number of cryptocurrencies.
Not a fan favourite
Weiss’s rating of C+ put Bitcoin square in the middle of the class with that average grade. Nevermind that Bitcoin has the largest network effects, greatest brand recognition and highest market cap of any digital currency. Apparently the folks at Weiss aren’t a big fan. That shouldn’t be surprising, because most of the entrenched financial interests in the world aren’t really pleased with Bitcoin, either.
Jamie Dimon, who has had numerous unpleasant things to say about Bitcoin, is representative of the type of mainstream market that is still evaluating this new and intrusive technology.
At the World Economic Forum in Davos, there are a large number of Bitcoin haters. This is unsurprising considering they are the “old guard” who have the most to lose by Bitcoin’s success. Joseph Stiglitz said of Bitcoin at the WEF:
“We have a good medium of exchange called the dollar. We can trade in that. Why do people want Bitcoin? For secrecy.”
Even Former US Secretary of State John Kerry showed his apathy towards the digital currency stating that:
“People are investing in it, it’s serious amounts of money and it’s got value so it’s going to be talked about.”
The support of Bitcoin and other coins rated by Weiss became evident when the agency explained the attacks it faced from these vehement supporters.
The agency said in a release Wednesday that: “Staff was up all night last night fending off denial of service attacks from Korea” and cited Korean social media posts calling others to bring down the ratings agency’s website.
The hackers then broke into the website, took information from it and are distorting it on social media, the company added.
Weiss’s reasoning for rating Bitcoin a C+, and then Ethereum a B, was because the digital currency is: “encountering major network bottlenecks, causing delays and high transactions costs,” according to a release. Bitcoin’s lack of governance was also a concern:
“Despite intense ongoing efforts that are achieving some initial success, Bitcoin has no immediate mechanism for promptly upgrading its software code.”
So why were there no “A” grades given? According to Weiss, they won’t give out that grade until the amount of volatility within the cryptocurrency sector dies down:
“That’s the number one source of misunderstanding between our model’s results and the grades that most folks in the cryptocurrency space expected: That big price volatility! That’s the main reason we have no A’s on our list right now.”
It’s unclear what price volatility has to do with the technical or fundamental merits of any particular digital currency project. If we are to assume that stability is the key to receiving a high rating, does that mean Tether would have outranked everybody? Despite serious concerns about the project’s solvency and integrity?