Ripple(XRP) took over Ethereum(ETH) as the second place with the marketcap of over 135 billion past week. The value of the token has skyrocketed from around 20 cents to $3.5 in less than a month. The idea behind the Ripple network is similar to that of a traditional bank where Ripple Labs holds 60% of the Ripple and the rest 40% in circulation which technically defeats the idea of decentralized currency system. It is also not mineable and many may not be aware of it.
Ripple has been been doing a great job and working with multiple large financial institutions to do international transfer quicker between the banks. Currently it takes multiple days for money to reach from one part of the world to other and ripple is working to solve this problem. This is a great idea and ripple has very talented team behind this great idea. They also have one of the largest token supply of 99,993,093,880 XRP in total and 60% is held by themselves . ( XRP is a token and not a coin like other crypto coins ).
So how was Ripple created and story behind it ?
Jed McCaleb is one of the most popular developer in cryptocurrency world and creator of MtGox. During 2011, the exchange was sold to Mark Karpeles ( current owner of Ripple) by keeping 12% ownership by McCaleb. Later under leadership of Karpeles, MtGox operating from Japan filed for bankruptcy during Feb 2014.
McCaleb agreed to sell the company since he was working OpenCoin at this time. However Karpeles kept the copy of the code for ownership reasons. The project was completed as of 2013 and sold to Ripple labs by Karpeles. Ripple labs developed it further and started an active promotion. They renamed and gave it a name Ripple. This is how Opencoin become Ripple which was available for public use.
During 2014, McCaleb created a fork of Ripple after multiple disagreements with his partner Karpeles and hence Stellar was born during July 2014. McCaleb held 9 billion Rippleand later the new Ripple owner Karpeles sued him in the court for variety of reasons like a typical bank. After long battle, McCaleb sold all his 9 billion XRP over time which shook the Ripple ecosystem for a while.
Ripple Global Freeze
During the fight between the founders, its believed that McCaleb’s funds were frozen for a brief amount of time.This also reveals an interesting but scary functionality of Ripple token itself.
Ripple can freeze its accounts using something called as “Global Freeze”. With this feature the entire network can come to a halt and Ripple Labs can actually do that. As per article released by Ripple during 2014 it can do below of the two.
- Globally freeze all their issued funds
- Freeze funds issued to a particular user. Frozen funds may only be sent back to the gateway ( Ripple Labs) who issued them”Ripple believes it needs these functionality to ensure regulatory requirements”
Hence investors must keep in mind that Ripple ( XRP ) is still controlled by Ripple Labs and have the ability to make or break anyone’s account like a typical banking system. Hence banks will like them and will support tokens like Ripple over time.
Is Ripple Minable ?
No. Ripple cannot be mined like Bitcoin or other regular cryptocurrency.
Ripple Labs has 100 billion XRP tokens and controls 60% of the circulation which means they control the price in many ways. Hence investors must be very cautious about it and mining is not possible in this case. Ripple labs can burn tokens if needed.
Why are Investors still buying Ripple ?
The Ripple price was around 20 cents for a long time and many investors new to the cryptocurrency space believed Ripple was a very inexpensive coin. Many even believed that it can be the next Bitcoin. Hence investors are inclined towards Ripple without even understanding the background and intension behind the product. To Ripple Labs credit, they have done a good marketing and have good team which adds to the value.
Considering there are 100 billion tokens , the value cannot reach the value of Bitcoin. In fact XRP can be risker for long term investors to invest in centralized token like Ripple when it cannot be called a true cryptocurrency.
Disclaimer : This is not an investment advice. Please do your own research when investing.
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Author: Author : Aaron
Crypto Enthusiast ! Leader in Blockchain. Senior editor since Nov 2017 and enjoy freelancing at Cryptonewsbytes.
Author : Aaron
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