Ripple Lab’s XRP Canva
XRP is the most pragmatic cryptocurrency out there.
Instead of moving away from traditional finance, XRP attempts to use blockchain technology to improve existing monetary systems.
It accomplishes this by working with the biggest financial institutions on the planet, including Bank of America , Santander and PNC.Additionally, XRP enables insanely efficient cross-border remittances for foreign accounts.
If XRP plays its hand right, it will become the plumbing of the traditional finance world.However, it has one huge drawback.Should I even say it? * Gulp* XRP is… somewhat centralized.
Did you feel that? Orwell and Huxley just turned over in the graves.So let’s explore the good, bad, and ugly regarding XRP.
What is XRP? Founded in 2012, XRP is a dynamic cryptocurrency created by Ripple Labs programmers Jed McCaleb and Chris Larsen.
XRP has one primary goal above the rest: To become the cryptocurrency for banks.
This has turned out to be a recipe for success.XRP is the closest thing you’ll find to an actual currency cryptocurrency— as opposed to the store of value narrative with Bitcoin — amongst any of the top ten coins by market cap.
Ripple’s token can handle 1,500 transactions per second.For context, BTC can only sustain a pitiful 10 transactions per second.
Scalability is the name of the game and XRP dominates it.
“Ripple was designed from the very beginning to essentially be a replacement for SWIFT [a leading money transfer network] or to otherwise replace the settlement layer between major financial institutions,” says Pat White, CEO of Bitwave .XRP stayed under one penny for most of its life before exploding in 2018.And despite undergoing a brutal investigation by the Securities and Exchange Commission, major financial institutions use it today.
Santander , Bank of America and American Express all use XRP to expedite cross-border payment transfers.
Moreover, during its lawsuit, XRP actually gained more projects than it lost.
SEC Vs.XRP (Why it’s Important) In a nutshell, the SEC took XRP to court last December arguing that the cryptocurrency is a security, not a commodity.
Plain and simple.
Here’s why this matters —
Securities: Represent ownership in a publicly traded corporation.The expectations of profit are driven by the actions of a third party (i.e.Tesla, Amazon, Google)
Commodities: Assets, property or goods that can be bought or sold on an exchange (i.e.Gold, Crude Oil, Bitcoin).These assets have much less regulation than securities.The SEC was created after the Great Depression to protect traders.
While many investors regard the SEC as scum of the Earth, their job is, in fact, to impose regulations that treat traders fairly.
When it comes to XRP, the SEC is arguing that this so-called open , permissionless and decentralized project is actually centralized by their parent company Ripple.
In reality, the SEC is a big baby.The judge presiding over the case even stated that XRP behaves more like a currency with utility, rather than a security.Furthermore, it was discovered that the SEC didn’t provide Ripple with enough warning that they’d crack down on their project.
The SEC is out for blood.They won’t get any.
Problems with Centralization XRP has an army.The XRP army.They get very mad when you say the word ‘ centralization.’
Centralization.
Centralization.Centralization.Centralization.Centralization!!
There, I said it.
Anyway, XRP does have some centralization concerns.Vidalecit, XRP uses a default list of 35 validators of which are determined based on trust.It’s very anti-crypto, but works nonetheless.
I’d be remiss not to also point out that the majority of the XRP token supply and nodes belong to Ripple.
Quite frankly, I’m grossed out by all of this.
Just kidding.It’s slightly worrisome, but XRP makes up for it by being a utility workhorse.
I just don’t think you can compare it to truly decentralized cryptocurrencies like Bitcoin or Ethereum.
How XRP Created Stellar Lumens (XLM) As a quick aside, XRP co-founder Jed McCaleb went on to create Stellar Lumens (XLM) after being fired from his original creation.
XLM isn’t technically a hard fork of XRP, but it is very similar.
It’s a superfast, scalable project that implements ideas that McCaleb couldn’t use for XRP.
The key difference is that Stellar Lumens is for the average person , particularly those in third-world countries.Much like Cardano , it wants to bring banking services to the 1.7 billion people who don’t have them.
Another key difference is XLM wasn’t booted off most major exchanges like XRP.This led to a record-breaking year for XLM in which it 7xed in price.
The Takeaway XRP makes a strong case as the number one utility-driven cryptocurrency on the market.Yes, including Ethereum.
Decentralized finance on Ethereum still has a long way to go.
DeFi is too esoteric for the mainstream populace to use.It’s just for the .1% of the population who happen to be crypto nerds (i.e.me, and not my mom).
Meanwhile, XRP is striving to be the first cryptocurrency, that, well, is an actual currency.XRP may start off as digital cash for banks and financial institutions, but could quickly infect the world with its novel concept.
Owning XRP is like owning a slice of the banks.
Is that a good thing? I’m still not sure.But it’s not going away anytime soon.
Ever since I was a child it was my dream to become a financial advisor.
Unfortunately, it never came true.Therefore I am not a financial advisor and you should do your own research and not just listen to random people on the internet.Nothing contained in this publication should be construed as investment advice..
