Weiss Ratings explains why it considers Bitcoin barely above average as an investment

Bitcoin is the best-known of the new breed of cryptocurrencies, but Weiss Ratings of Palm Beach Gardens says individual investors should be cautious. It gives the virtual money a grade of just C+.

“It may have the strongest brand and the early-mover advantage, but others have the late-comer advantage — the ability to hit the ground running with legacy challenges mostly resolved and with advanced features,” Weiss says in a new analysis of Bitcoin.

Related: Former Wall Street economist on Bitcoin: “I’d rather buy tulips”

How Weiss breaks down Bitcoin on four measures:

Investment Reward. “Despite rapid price appreciation in 2017, Bitcoin has been losing ground to competing altcoins and currently ranks low,” Weiss says.

Investment Risk. “Given the extreme volatility of recent months, it should come as no surprise that Bitcoin does not achieve a stellar grade on this index either,” Weiss says.

Fundamentals. “Bitcoin does well in terms of network security, usage, developer participation and user popularity,” Weiss says. “However, it underperforms in two areas: (1) network capacity, as evidenced by a meager four transactions per second and fees of about $10 each, plus (2) centralization, with five large mining pools controlling nearly three-quarters of the hashrate.”

Technology. “Bitcoin does well with regards to the security of its blockchain, but loses points due to deficiencies related to scalability and sustainability,” Weiss says. “It does not have adequate governance. It cannot easily upgrade or adapt. And despite some workarounds, it’s mostly stuck in technology that’s falling behind the times.”

Weiss likes the cryptocurrency Ethereum better -- that altcoin earned a B. However, Weiss gives no virtual currency an A. Access to the Weiss Ratings’ full report card on dozens of cryptocurrencies costs $468 a year.

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