Ripple is a controversial project in the crypto verse. It’s designed to make banks more efficient and profitable when it comes to settling international payments, which is opposite to the whole crypto-coin idea: to get rid of all fiat currencies and the world’s financial system.
But Ripple is successful in this regard anyway. They are bringing in more partners every week, and the XRP token is about to take over Ethereum as the world’s second-biggest in market capitalization.
Despite all that success, Ripple remains controversial (some observers would say unpopular) among crypto enthusiasts. Why? Because this is a coin that was pre-mined in full before it came live. Naturally, the owners of the coins are the people who did the mining, which, in this case, is none other than Ripple Labs.
Ripple owns more than half of the world’s supply of XRP (their native token). They have gone out of their way to ensure everybody that they are not going to try to control the coin’s supply to manipulate prices.
Ripple placed most of its tokens in an Escrow smart contract that drops a billion coins into the market every month. This ensures that supply can’t possibly be short. At the same time, they’ve kept recruiting new partners that will use XRP to settle international payments so that demand is also relevant.
But this is the cryptosphere so; a central question is still this: if Ripple owns so much of XRP, how decentralized can it possibly be?
Well, there are two ingredients to this dish. Ripple and XRP are not the same things. Ripple is a blockchain technology that supplies financial platforms for the financial world. XPR is the native token. Not the same entity at all.
Because of the Escrow that drops tokens into the market every month automatically, Ripple can’t really control XRP’s price at all. So far, XRP’s prices have been driven by speculators, but this won’t last for much longer. This is a useful coin that real banks are using in real life to make life better for their customers.
So now we come back to the central question: centralization.
Just a few weeks ago Mr. Schwartz published a white paper in which he explained in detail why Ripple is even more decentralized than Bitcoin or Ethereum.
He explained how 80% of Bitcoin mining is currently done in China (a country whose government is hostile to cryptocurrencies), and Ethereum’s computations are equally concentrated in a few places in the world. Ripple’s blockchain is distributed more evenly across the globe.
This doesn’t change the fact that Ripple owns most of the XRP supply. But they can’t control it, even if they wanted to. That’s what cryptography is all about. XRP is growing because it’s useful, not because of speculation.
If you read Mr. Schwartz’s white paper carefully, if you know anything at all about cryptography you’ll have to admit he’s right. The XRP ledger is, indeed, decentralized. Even more so than Bitcoin or Ethereum.
As long as Ripple’s XRP is a tool for the international financial system to be more profitable, it will remain unpopular in the cryptosphere. But that doesn’t mean it won’t go up in price.