CFOs and corporate treasurers are highly unlikely to be dealing with cryptocurrencies anytime soon, but if you are contemplating doing so, the first-ever cryptocurrency ratings have just been issued.
Weiss Ratings, an independent rating agency of financial institutions in the US, released its ratings of cryptocurrencies on January 24, despite a massive Korean cyberattack on its website.
Weiss gives Bitcoin a C+ (meaning “fair”) and Ethereum a B (“good”). None of the cryptocurrencies covered currently get a grade of A (“excellent”).
The Weiss Cryptocurrency Ratings evaluate price risk, reward potential, blockchain technology, adoption, security, and other factors. “Due to rapid changes in the data, upgrades and downgrades are more frequent than in other sectors we cover,” said Martin D. Weiss, the rating agency’s founder.
Weiss released a sampling of its cryptocurrency ratings, selected randomly to illustrate a variety of strengths and weaknesses:
- Bitcoin (rated C+) gets excellent scores for security and widespread adoption. But it is encountering major network bottlenecks, causing delays and high transactions costs. Despite intense ongoing efforts that are achieving some initial success, Bitcoin has no immediate mechanism for promptly upgrading its software code.
- Ethereum (B), the second most widely adopted cryptocurrency, benefits from more readily upgradable technology and better speed, despite some bottlenecks.
- Novacoin (D) and SaluS (D) are weak in terms of both technological innovation and adoption.
- Steem (B-) enjoys a relatively good balance of moderate strength in nearly all the key factors considered along with a social network feature.
Established in 1971, Weiss Ratings grades 55,000 institutions and investments. Its website experienced denial of service attacks the night before it was due to release the ratings, said Weiss.
“Earlier commentary on social media expressed considerable fear we were about to release negative ratings on their preferred currencies,” he said. “So this may be an attempt to thwart our release.”