Despite attempts to play the role of a company that promotes the idea of the ease of use of digital assets, in fact it does not use the real blockchain.
However, these circumstances do not restrain the success of Ripple and the growth of altcoin XRP, which today ranks second in terms of market capitalization.
However, it is important to clarify some things with three small but important considerations about Ripple and the XRP token.
Trust and centralization
Compared to the traditional fiat currency system, the blockchain is a p2p model that presents new innovative payment concepts (and more), including decentralization and trust. Thus, the cryptocurrency ecosystem eliminates the need for the participation of any intermediary or a third party.
In the case of XRP, the RippleNet token, which is in turn controlled by Ripple, this works in the opposite way.
In fact, Ripple meets the needs of users and investors, especially institutional investors, and to gain their confidence, it blocked 55 billion XRP coins to solve the problem of volatility.
This move questions the latest statement by Ripple CEO Brad Garlinghouse, who said that “XRP can exist without Ripple”, which could only be true if Ripple were a company that is present on the XRP network as a regular member.
In reality, this is impossible, since Ripple is the holder of 62% of all XRPs, which ensures colossal centralization.
Ripple, XRP and Banking
The basic principle of cryptocurrency is to avoid centralized control, which is not possible with XRP due to the centralized presence of Ripple.
But there is another reason: the tokens are already mined, and therefore the developers of Ripple can decide when and how much to release or not to release. Thus, buying an XRP can be the equivalent of investing in a bank.
It is known that all users can buy and use XRP, however mainly XRP rotates in the banking sector, as if it plans to replace the existing bank payment processors, for example, SWIFT.
Recently, Garlinghaus said that soon banks could begin offering services for the direct storage of cryptocurrency to customers.
However, with the XRP mission, which consists of being present in the banking sector, the project will have competitors who have successfully implemented cryptocurrencies and have increased their potential using blockchain technology.
So the current success of Ripple will be questioned?
Ripple, XRP and Bitcoin
The last and most important consideration is connected with the two leading cryptocurrencies – Ripple with its XRP token and Bitcoin, as well as with the huge difference that these most frequently used technologies share.
Ripple (XRP) with Ripple Labs received investments from Santander, Axis Bank, Yes Bank, Westpac, Union Credit, NBAD and UBS. Bitcoin is an absolute ideal of the system, which excludes banks and would allow a person to become a bank without intermediaries and restrictions.
Despite the fact that the volumes of the two cryptocurrencies are the largest in the entire ecosystem, as well as the high prevalence of XRP compared to bitcoin, there remains a significant difference in the price of the two cryptocurrencies. It reflects the real value, including all variables, such as the utility aspect, that is, how much users are willing to pay to receive this asset.