RIPPLE’S CEO, Brad Garlinghouse, told CNBC that Ripple would have “dozens” of banks using their XRP Ledger, the open-source codebase that can send 1,500 transactions per second while utilizing Ripple’s XRP cryptocurrency.
This news may sound exciting to someone who views cryptocurrencies as just a means of transacting value instantly and with little to no fees, but to most this is alarming.
The goal of cryptocurrencies since the beginning has been to take power back and transact peer to peer.
A distributed blockchain would allow anybody, anywhere in the world to exchange value without the need for a trusted third party (a bank).
This thesis was a direct result of the 2008 financial meltdown, so for Ripple to come out with a “cryptocurrency” that is backed by banks, designed for banks, and partnered with banks is contradicting to the primary goal of a cryptocurrency.
The breakdown of this centrally controlled digital asset makes it appalling to think that it is one of the top 3 “cryptocurrencies” by market cap in the world.
To begin, XRP is owned and operated by a central company called Ripple, which should be a huge red flag. 60% of XRP is held by Ripple (the parent company) in escrow accounts. On top of that, 17% of XRP is owned just by the Chairman.
If the massive amount of XRP controlled by Ripple wasn’t concerning enough, the consensus protocol will be. According to many Crypto experts, should disqualify XRP from being classified as a cryptocurrency.
Popular exchange desk BitMEX unleashed a scathing critique of Ripple which stated “Ripple’s system appears for all practical purposes to be centralized”.
The report titled the “The Ripple Story”, concludes that Ripple “does not appear to share any interesting characteristics with crypto tokens like Bitcoin or Ethereum, at least from a technical perspective.”
BitMEX conducted in-house testing with Ripple’s technology and gathered that Ripple “is essentially in complete control of moving the ledger forward, so one could say that the system is centralized.”
Centralized systems are faster, cheaper to run, more efficient, and easier to integrate into other systems. However, we already have centralized systems that put the full power of the ecosystem into the hands of a few “trusted” parties and they are the reason cryptocurrencies and decentralized protocols were pioneered.
The 2008 financial crisis exposed the plague of fraud and deceit on Wall Street, and it appears that quite a few people have fallen for the same trap, in the form of a “cryptocurrency,” and are ready to drink the Kool-Aid.
It should also be noted that BitMEX claimed Ripple is “missing 32,570 blocks from the start of the ledger and nodes are not able to obtain this data.” This could make it impossible to audit the company and its whole chain in the future. So much for transparency.
XRP is not a true cryptocurrency, and it is in direct opposition to the libertarian vigor from which blockchain is derived.
Hopefully, consumers can place their faith in highly secure, decentralized networks to dismantle the global banking cartel or else history might repeat itself.