Weiss Cryptocurrency Ratings
So, one thing I noticed in the past week or so is that there’s been a lot of fuss regarding the Weiss Cryptocurrency Ratings. This is especially true given the fact that there were no cryptocurrencies that received a score higher than that of B (Ethereum+EOS).
The ratings were officially published on January 24th, 2018, and features 70+ cryptocurrencies. A pdf of those cryptocurrencies and the scores given to them by Weiss can be found here: http://moonnocoin.com/weissratings-sokuhou/Weiss-Cryptocurrency-Ratings.pdf
According to them:
I wasn’t familiar that these things were indexed before this was mentioned directly. However, I found all of these indices that they refer to in the above screenshot.
1.) Cryptocoin Risk Index = https://www.coindevelopmentindex.com/
2.) Cryptocoin Reward Index = I couldn’t find any definitive source that provides this information, but according to Weiss, the definition for such an index would include the following:
“The Cryptocurrency Reward Index evaluates
(a) returns compared to moving averages,
(b) absolute returns compared to a benchmark,
© smoothed returns, and other factors.”
Although basic math teaches us how to calculate the potential reward index for something if the risk index is already known. (Here’s an investopedia article about it: https://www.investopedia.com/articles/stocks/11/calculating-risk-reward.asp )
3.) The Cryptocurrency Technology Index — I’m guessing that these factors were determined by Weiss themselves and compiled into an index.
4.) The Cryptocurrency Fundamental Index — Once again, Weiss would have had to develop this themselves. However, I can’t imagine how there would have been enough information to build such an index per their requirements.
Want to learn how to create your own index? Anyone could do so (with the correct technology and proper resources):
Here’s an introductory article posted on Medium: https://medium.com/cryptomover/index-investing-in-cryptocurrency-best-practices-a613437b243e
Here’s a WSJ article that shows some prominent research regarding different indexing strategies and how scientists/financial analysts have found that certain strategies are superior to the typical weighted average indexes that are used today: https://www.wsj.com/articles/SB10001424127887323844804578527611352978912
Some examples of already existing cryptocurrency indices:
Another useful index that was dug up can be found here: https://cci30.com/ ← It sorts cryptocurrency using the top 30 coins into an index and assigns weights to them. This is the classical method of creating an index.
This article describes another index that was created for cryptocurrency: http://www.etf.com/sections/features-and-news/index-investing-comes-cryptocurrencies?nopaging=1
Here’s a company that’s even created a token based solely on the principle of a coin that’s value increases/decreases based on it’s pegged fund portfolio. So an investment in this coin would be an investment in the fund’s portfolio itself.
https://crypto20.com/en/ ←- These guys use an algorithm to create their index — I’m not sure what this is.
Here’s a screenshot:
Here is yet another one: https://taifuindexes.com/
I’m sure you get the picture by now.
If you visited the Weiss Cryptocurrency Rating website, you’ll see that they ultimately want to leverage this opportunity to have individuals pay to invest in their fund. *Surprise!*
Okay, so now you know that this is a burgeoning market in the cryptosphere (no surprise because this was a financial instrument that was and STILL is VASTLY underused in the crypto sphere). There’s no crime in developing a powerful algorithm for creating a crypto-index and then investing in that index based on proven performance after backtesting and other analytical studies. In fact, this is the type of smart money thinking that makes me think that crypto will last for a very long time.
So What About the Ratings?
I’m not covering them.
Because I don’t need to. The ratings aren’t designed to be pure, objective evaluations of the cryptocurrencies themselves — the ratings are designed to be another one of those indices that this article covers.
It’s just another backdoor way of recruiting individuals to rely on the ambiguous algorithmic manner in which Weiss applied ratings to the cryptocurrencies so that they can sell their services to the public.
That MUST be a conspiracy theory — Knock it off
This should make it more than evident. The Weiss Cryptocurrency Ratings are just ‘weights’ that they would attach to each investment — not value statements about the coins themselves.