It's taken longer than planned to get around to this, but it is a topic I have been asked about three times in the past week, in reference to alternatives and how trustworthy various deposits are. Assessing Bitcoin-deposit takers and interest providers is quite different to the real world as many of the metrics do not apply very well, especially as there is unlikely to be interest and depreciation, or large operational income. It is also desirable to keep things simple and brief where possible. Therefore, I propose to use the following metrics to form the basis of ratings:
FinancialLiquid Assets: Those able to be redeemed within 48 hours - includes cash held at an exchange.
Assets: Typically investments in fixed term deposits or extended as loans.
Investments: Stocks, bonds and investments in BTC enterprises that are not necessarily liquid.
Nett Income: Average monthly income for the last 3 months.
Bad debts: Total of bad debts to Assets for the last 3 months.
Current Liabilities: Payable within 1 month.
Term liabilities: Payable later than one month.
Non-FinancialIdentity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments.
Non-FinancialIdentity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments within the last six months.
Ratios------------------------------- | AAA | AA | A | BBB | BB | B | C |
Liabilities / monthly income less than | 3 | 6 | 9 | 12 | 18 | 24 | - |
Bad debt ratio less than | 0 | 2 | 4 | 6 | 8 | 10 | - |
Current_liabilities_/_Liquid_Assets_less_than | 1 | 1.5 | 2 | 2.5 | 3 | 5 | - |
Liabilities_/_Assets_less_than | 0.5 | 0.75 | 0.9 | 1 | 1.1 | 1.25 | - |
Time in "business" months | 12 | 6 | 5 | 4 | 3 | 2 | 1 |
Modifiers - to move from one category to another takes three points.
ID verified: +1
Account limits: If current limits maintain or improve ratios, +1, otherwise -1.
Disaster recovery: +1
Prior late/missed payments: -3 per event.
Example updated and is posted below.
Also as usual, comments welcome.