Within the past week, Ripple (XRP) has surpassed Ether to become the second largest cryptocurrency. The Market cap of Ripple at one point reached around 100 billion USD. Within the last 7 days it has had a incredible 121.9% change (Crypto Market Cap). This phenomenal increase in value of Ripple have caused many investors and speculators to ask whether Ripple is the next big cryptocurrency. Within the last week Bitcoin and other cryptos have encountered slumps in their prices while Ripple has experienced huge leaps. Much of the drops in cryptocurrency prices can be attributed to natural market corrections. No asset can experience a long term bull market and not expect sudden drops. But whether Ripple can manage to seize the crown of king of the cryptos, many people have pointed a finger of blame at Ripple, calling it a scam by the central bankers. (See chart below for Ripples pricing in the last 7 days- Cryptocurrency Market Capitalizations | CoinMarketCap (http://CoinMarketCap.com))
Cryptocurrency in its genesis can be linked to several ideological movements. These include a variety of anti-government political groups, black market sellers/buyers, internet terrorists, silk road users, etc. (Because the term anti-government comes with many negative connotations it is important to further elaborate on these groups: Libertarians, Anarchists, Voluntaryists, etc. Many of these movements are non-violent and advocate for a massive reduction in government overreach.)
The claims against Ripple are as follows:
- Central Bankers created XRP and hold a large portion of them in anticipation of gaining massive profits
- Ripple does not use blockchain technology and is not truly decentralized
- XRP will do nothing to change the nature of financial banking and centralized institutions
These claims are all true, but hold no serious traction against Ripple. It is important to recognize that the motivations behind Bitcoin, Ethereum, Litecoin, Dashcoin are to completely bypass the central banking system while Ripple fails to do so, but Ripple does hold great potential. It conforms to the current system- making it easier to use, safer in the public’s eye, and has potential to make huge leaps in the coming year.
For one, Bitcoin can also be pointed as being a massive scheme for the creator of it to make money. Satoshi Nakamoto (a pseudonym-person or a group of people) has gained massive profits off of his creation of Bitcoin (he holds around 1 million Bitcoin-How Dangerous is Satoshi Nakamoto? (https://www.coindesk.com/dangerous-satoshi-nakamoto/)) Recently Charlie Lee of Litecoin sold all of his holdings to ensure users that there was no special interests involved (Litecoin founder Charlie Lee says he’s sold all his holdings in the cryptocurrency (https://www.cnbc.com/2017/12/20/litecoin-founder-charlie-lee-sells-his-holdings-in-the-cryptocurrency.html) ). Good on Charlie, but can we really expect the central bankers to do the same? Central Banks are driven by profit and they will do everything in their power to push Ripple forward and make sure it is successful-and this is not all that bad for investors, because they will make gains in profit too. Additionally, it is important to note that people can use the Ripple network and not go through the Ripple company. Ripple has its eyes on profit (as it should) but does not force users to conform with changes it seeks to make.
Ripple is the name of the open source payment system that banks utilize to make “lightning-speed” transactions and XRP is the token used within the system. Ripple’s network is known as a inter-ledger protocol- which essentially allows for secure transactions between ledgers and can connect different accounts on different ledgers. The technology is different than Bitcoin, but still allows for very secure transactions. It essentially relies on multiple trust institutions to confirm payments and transfers. Another difference is that there is no “mining” (mining is a function that takes place on the Bitcoin network to secure it and ensures that blocks are made and double spending does not occur) that takes place on the Ripple network. All 100 billion coins are already created. So no, it is not distributed and decentralized, but still relies on trust institutions. The way this is structured is mainly due to the purpose of Ripple: allow for very quick transfers and little-to-no transaction fees between banks, saving anywhere from 60–75% of what it would cost. (Transfers from American banks to Asian banks have to go through many additional institutions before being transferred, often incurring expensive fees and taking many days. I.e. Bank of America through the U.S. Federal Reserve, U.S. Federal Reserve to Japanese Federal Reserve etc. etc.)
And finally the last point in regards to Ripple not changing the nature of central banking, I concede is a legitimate claim. Libertarian philosophy abhors centralized authority and points to many of the woes created by the Federal Reserve and their monetary policy. XRP utilizes the revolutionary wave of digital currencies and breaks away from the monopoly government typically claims on currency, but does nothing to weaken the power of central banking (For a good laugh on this read Krugman’s article about how Bitcoin is “evil” Bitcoin Is Evil (https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/)). The motivation of Bitcoin was driven by distrust in the monetary system following the ’08 crash and Libertarians hailed it as the potential beginning of the end of central banking. But Ripple does little to support this ideological movement. And honesty I know, you probably don’t care. If you’re an investor it may be a great time to jump into the market of Ripple. The great thing about cryptocurrency is it does not have to be politically or ideologically charged! Regardless of this huge difference in ideological motivations, one thing can be certain-the future of digital currency is here to stay.
Ripple won't be #2 for long. I'll be surprised if it's even top 5 by the end of 2018.
So many other better coins out there with more use.
Followed.
We'll have to see. How do you think Dash and Monero will do?
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