Altcoins – What is Ripple?
CoinMarketCap currently lists more than four thousand altcoins and, if you would take a look at the bottom at the list. However, the top of the bucket includes those like Litecoin, Bitcoin Cash, Cardano Stellar and a new upcomer like Polkadot. However that top tier has long been dominated by two cryptocurrencies in particular, not because they have reached a certain market cap but since they have appeared as true innovations to the industry which have been embraced by some gigantic financial or technology companies. I had made an introductory post about one of the duo, Ethereum, with my previous one and it’s now time that we completed the pair with Ripple’s story.
What does Ripple promise?
Jed McCaleb along with Arthur Britto, David Schwartz and Ryan Fugger who had already developed a system called OpenCoin were the masterminds behind Ripple. OpenCoin would eventually transform into Ripple and the cryptocurrency running on it called XRP.
What Ripple promises is an alternative currency transfer independent from any kind of borders and limitations, lightning fast compared to SWIFT system that might take a week or so in some cases, mitigating costs of the transfer along the way. 2013 saw banks showing interest in the system and by 2018 over 100 of them were in, mostly using XCurrent messaging technology, harboring reservations about the XRP cryptocurrency as it still was volatile. Today, 1 XRP averages 0.28 USD with a market cap exceeding 11 billion USD. Those figures were almost triple almost 4 weeks ago, by the end of December 2020, when U.S. Securities and Exchange Commission initiated an investigation into Ripple Labs, the CEO and co-founder on the claims of selling unregistered securities. The news made Ripple plummet in value, most people thought it was over for XRP – the majority still thinks so although the value recovered to a certain level and looks to be stable for now. However this does not strip away the potential of the network being taken down completely, draining any economic value XRP holds. What SEC brought forward as allegations against the platform is that Ripple Labs was generating and distributing the XRP which makes it a central authority and financial institutions did not adapt the system as it is advertised. Out of 14.6 billion units of XRP, Ripple executives made 1.38 billion USD they used for the system and for their very own wealth.
Typically, when a government agency swoops in, like in the case of Mt. Gox, the object of the intervention generally ends up dead in terms of value before everything is over, nevertheless this might not be the same for Ripple as it is established and rich enough to defend itself in court. Should they be doomed for good, it will be like a pyrrhic victory for the sides that would love the outcome in the short term, since in the long term the established money transfer systems will be dissolved and replaced with their far less costly and definitely faster digital alternatives.
Until then we will hope to see the truth come out and investors of small scale walk out of this unscathed.