In today’s cryptocurrency hysteria, everyone is an even 70 blockchain wizard launching a fresh hedge fund.
In reaction, they received a great deal of criticism on social mass media. And rightly so.
I’ll arrive at the specific issues with the Weiss Cryptocurrency Ratings, but first I must explain that the low quality of these ratings is merely an illustration of the current hysteria around cryptoassets more generally.
Weiss Ratings includes a long history being an independent ratings company covering traditional possessions, but it’s crystal clear they don’t realize Bitcoin at all. Nevertheless, Weiss Ratings isn’t alone in their Dunning-Krugering. This type of thinking is incredibly common for new individuals who are coming to Bitcoin for the very first time, and there might not necessarily be any way to obtain around it. People have to understand on their own. In accordance with Morgan Stanley, with 84 of these starting out just this past year. Who have thought there will be so many cryptocurrency experts sitting around who can offer their opinions just as the full total value of most cryptoassets was reaching all-time highs? Just what a great coincidence!
The Bitcoin Rating
The first thing we should talk about could be the Bitcoin rating. Bitcoin may be the gold standard in the cryptoasset ecosystem. The cryptoasset market all together is only possible due to Bitcoin. No other cryptoasset has the network effects, liquidity, reliability or longevity that Bitcoin has. When there’s a cryptoasset price panic, Bitcoin doesn’t fall as fast as the altcoins. It’s often referred to as the reserve currency of cryptoassets. In a rating system that is designed around the avoidance of risk, Bitcoin should be the star of the show.
But no. Ethereum.
The EOS rating is particularly notable as the project hasn’t even launched yet. There is so much disagreement with Bitcoin’s initial rating in the Weiss Cryptocurrency Ratings that Weiss Ratings made a post explaining their reasoning behind the rating. As the post noted Bitcoin’s superb fundamentals, in addition, it claimed that the world’s first cryptoasset is without other areas.
“Bitcoin falls short in two other important areas: Our Risk Index, reflecting extreme price volatility[,] and our Technology Index, reflecting Bitcoin’s weaknesses in governance, energy consumption and scalability,” said your blog post.
In terms of the chance Index, The Technology Index is where they really lose me.Bitcoin gets the strongest governance out of any cryptoasset network around today because it may be the only one which has reached an even of adoption that means it is less vulnerable to an individual entity having an excessive amount of control over the system. The worthiness proposition of a coin with “strong governance” is leaner than a coin without governance at all as the whole point of the systems is usually to be permissionless and resistant to censorship.
Energy consumption is irrelevant and contains no place in an assessment of cryptoasset valuations. Perhaps Weiss Ratings could explain the relevance within the future.
Weiss Ratings’ knock on Bitcoin with regards to scalability is because of the 4 MB block weight limit. “It really is encountering major network bottlenecks, causing delays and high transactions costs,” says an announcement from the ratings publication.
Quite simply, Weiss Ratings thinks way too many folks are using Bitcoin to transact, so that it should get a lower grade.
Every cryptocurrency network faces a tradeoff between centralization and transaction costs if enough folks are using it. Building layers together with the base blockchain is considered as the best approach to scaling these cryptocurrency networks further, and Bitcoin’s first stab as of this scaling method, referred to as the lightning network, has already been being played around with on mainnet.
If Bitcoin gets a knock in scalability, it’s likely they haven’t accounted for the centralization tradeoffs – with regards to technical implementations and/or governance – that include another, “more scalable” networks.
Electroneum and Monero
The clearest indicators that the Weiss Cryptocurrency Ratings are complete hogwash are located when you compare a number of the ratings on the list.
For instance, Zcash and SmartCash have exactly the same rating. SmartCash is apparently a knockoff of Dash which has significantly less than $1 million worth of trading volume within the last a day. But at the very least Zcash does something interesting.
Both most hilarious cryptocurrencies to compare from the Weiss Cryptocurrency Ratings are Monero and Electroneum. Monero is really a C and Electroneum is really a C-.
Elements of the Electroneum paper are plagiarized from the initial CryptoNote paper, which Monero is situated. The development team behind Electroneum is indeed inept that they didn’t know zero-fee transactions will be a bad idea.
A close call
But yes, this can be a close call. The problems with the Weiss Cryptocurrency Ratings should come as no real surprise. In the end, they’re new here. They don’t know very well what they don’t know. Their status as the expert cryptocurrency ratings agency is self-proclaimed, much like every other cryptocurrency expert that has popped up over the past few months.
This is an impression piece by Kyle Torpey. The views expressed are their own , nor necessarily reflect those of BTC Media Inc or Bitcoin Magazine.
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