As cryptocurrency starts to grow in popularity and function, companies have been developed to help gauge the quality of each project. Not all crypto projects are the same, as they are designed on different platforms and have different purposes.
Because of this, Weiss Cryptocurrency Ratings is one of the first companies to create a crypto-rating. And in this post, we’ll briefly explain how it works. So let’s get started!
Weiss crypto-rating Scale
Weiss rates cryptocurrency with the following grading scale:
E: Very Weak
The minus or a plus sign denotes that the cryptocurrency is in the upper or lower third level of a grade range. If a cryptocurrency project receives an F, then its a failed project or it has been subjected to fraud.
Before reacting to or acting on any grade, you should be aware of four important notes:
No Safe Cryptocurrencies
From their beginning development stage until they’re launched on an exchange, there’s no such thing as a “safe cryptocurrency.” You have to accept the risk, market irregularities, price volatility, and a market impacts of deficiencies in certain platforms such as exchanges.
Frequent Rating Changes
When speaking on cryptocurrency, the metrics used to evaluate them can change over time. Therefore when analyzing using Weiss Cryptocurrency Ratings, you should expect frequent downgrades and upgrades.
While the Weiss Cryptocurrency Ratings are on an objective analysis freed from conflicts of interest, they shouldn’t be viewed as the final endeavor. All of the grades that are given by the Weiss Rating Company are opinion, to be used in public for analysis, users, and developers.
It’s impossible for any rating model, no matter how well designed, can handle every factor, especially for cryptocurrency. For example, to evaluate software programs of each cryptocurrency, a team of expert blockchain developers will have to make sure that they audit and thoroughly test the code. Although this effort would be a huge step forward, especially for certain institutions, it’s beyond the project scope. Instead, Weiss Ratings uses the following model to help keep its ratings transparent and as accurate as possible.
- Current data on the cryptocurrency’s trading patterns, technology, and performance.
- Proprietary formulas that turn the data into comparable ratios.
- Proprietary sub-indexes that aggregate ratios to measure the key features and factors considered critical to the future success or failure of investments in every cryptocurrency.
- Sub index aggregation into four main indexes, each having a separate letter grade – Adoption Index, Technology Index, Reward, Index, and the Risk Index.
- Aggregating the previous four steps into an overall letter grade.
In the end, the crypto-rating for every cryptocurrency varies. With Weiss, we can see that companies are starting to thoroughly analyze each project for quality, transparency, and the value of their native currency. Conclusively, we believe that you should take each crypto analyst company with a grain of salt and invest at your own risk.