The Ripple vs. SEC lawsuit has been the talk of the crypto town. After a partial victory, the cloud of uncertainty has lifted a bit. However, XRP still remains a hot topic for debate, mainly due to its centralized nature.
Let's dissect this multi-layered issue.š
A Brief History of Ripple: From RipplePay to Crypto Giant š
Founded by Canadian programmer Ryan Fugger in 2004 as RipplePay, Ripple was initially a peer-to-peer payment network. By 2011, RipplePay metamorphosed into Ripple Labs, shifting its focus to bridge traditional finance and blockchain.
Ripple wasn't initially a #blockchain project. It only incorporated blockchain technology after being acquired by the trio:
Jed McCaleb, Arthur Britto, and David Schwartz.
Originally, 80% of XRP tokens went to Ripple Labs and 20% to its founders. This has led to concerns about price manipulation. Most of the remaining XRP is in escrow, limiting Ripple Labs to selling 1 billion XRP per month.
Centralization vs. Decentralization šļø
Ripple aimed to make #crypto more institution-friendly, but the compromise led to a more centralized structure. Unlike Bitcoin, which operates on a vast network of miners, XRP Ledger relies on a limited set of validators.
šØļø "You can't just come in with a billion dollars and say, 'I have enough for 1,000 #Ethereum validators, I'm gonna run them all,'" - Red Sheehan, Messari Research Analyst.
XRPL's Proof of Association (PoA) consensus mechanism has faced skepticism. Unlike #bitcoin and Ethereum, which allow anyone to mine or stake, XRPL requires validators to be on a "Unique Node List" (UNL), making the network less decentralized.
Intriguing Statistics: There are around 100 validators on the XRP network, compared to over 1 million miners powering Bitcoin.
Expanding the Ecosystem š±
While #XRP has native NFT functionalities and a decentralized exchange, it lacks in programmable smart contracts, unlike Ethereum. However, there are ongoing efforts to introduce sidechains and "hooks" to improve XRP's functionalities.
Ripple's RippleNet suite based on XRP Ledger is seeing increasing adoption from banks for On-Demand Liquidity and Central Bank Digital Currencies (CBDCs).
Concluding Thoughts š¤
Engage with the XRP community, educate yourself on its technologies, and decide whether it aligns with your investment philosophy.
Many think they must choose between XRP and Bitcoin as if supporting one negates the other. This mindset leads to a dilemma, causing unnecessary stress and confusion.
XRP and Bitcoin were built to perform different tasks and don't come under direct competition.
"The stock market is filled with individuals who know the price of everything, but the value of nothing." - Philip Fisher
