Ripple: the Arguments for and against

Earlier this year, Ripple broke out of a series of disorderly trades, and even rose in price from $0.30 to $4. And although the quotes soon decreased, interest in XRP did not cool down: the official statements and affiliate programs of the company are now being watched by a large audience, and the cryptocurrency itself reached the third position of world leaders in total value. But there is a controversial point: XRP is not cryptocurrency.
So, at least, the user BitcoinTalk under the nickname "leopard2"wrote recently. And many in the industry agree with him, including CEO Ripple brad Garlinghouse:
"I don't call it (XRP) cryptocurrency. This is not a currency," he said during the February Yahoo Finance conference.
Instead, the company prefers to use the term "digital asset". And it doesn't seem like a half-truth. Ultimately, the definitions of "token", "asset", "unit" and "currency" are used arbitrarily in the industry.

But even if XRP is not a cryptocurrency in the strict sense, looking at it through the prism of the properties and problems inevitable for cryptocurrencies opens eyes to some important facts.



XRP is a centralized asset
Perhaps the lack of full decentralization is one of the most popular criticisms of Ripple.

For beginners, this does not seem such a big problem. However, for the" veterans " of the industry decentralization is very important. Supporters of decentralized cryptocurrencies consider the Internet an exemplary decentralized system: the movement of information flows is free and open (with some restrictions) in the absence of a single governing body.

At the same time, another part of the crypto community is ready to put up with concentrated management, because the opposite, in their opinion, is ineffective. Ripple developers recognize that XRP works a little differently than the same bitcoin, and is not as decentralized as they would like. But has XRP become a better form of digital money than bitcoin?

The argument against Ripple: there is an opinion that XRP has not brought anything new to the crypto economy and is simply creating "a lot of noise out of nothing" in the nascent industry.

In disputes, it is often argued that Ripple selects nodes that validate transactions, thus Making a list of unique nodes (Unique Nodes List; UNL). On Bitcoin, Ethereum and other cryptocurrencies blockchain, any user with the installed SOFTWARE has such authority.

The same point is mentioned in their study, the largest Ripple exchange Bitmex, saying that XRP "does not serve as [a] clear purpose."



Ripple really attracted many institutions (for example, Microsoft and MIT) to maintain and operate nodes. However, critics argue that due to the specific algorithm, third-party nodes tend to automatically "agree" with Ripple nodes, and hence with the company itself.

The argument in favor of Ripple: the developers, on the contrary, insist on the fact that XRP is better than the traditional cryptocurrency for many reasons: it's faster, scales better, and does not require large expenditures of energy, in contrast to the BTC blockchain with it demanding algorithm PoW. Moreover, the chief Executive of ripple markets Corey Johnson (Cory Johnson) said that XRP has "internal value" stands out against other, "frivolous" currencies and assets.

It is also worth noting that Ripple over and over again explained that over time XRP will be decentralized; formulation and implementation of this task is stipulated in the company's blog. And there is reason not to doubt that it will happen. Already now startups are trying to come up with new ways to use XRP and even launch ICO, which Ripple itself does not really approve of.

In an interview published on CoinDesk, Ripple CTO Stefan Thomas stated that in the future XRP will become "more decentralized" than bitcoin as developers add new features and Refine the technology. He, like his other colleagues, recalls that in the past the company kept all its promises.

Indeed, when the Ripple is still not working open source, critics say that it will never change. However, the company has opened the code for the "full node" XRP, realizing that it can lead to increased criticism of third-party developers. But users were able to connect to the network for the first time and contribute, which then, in 2013, looked like a departure Ripple from full control over XRP.

Thus, Ripple developers are confident that their reputation, backed up by action — and last year the company added 55 new nodes — will make the rest believe in their plan, no matter how ambitious it may be.

The position of the XRP in the Ripple range of products — obscure and that's the problem
Even if you put aside the questions of semantics, the position of the registry XRP still need to understand.

According to Bloomberg, XRP does not have a clear definition, which means that the us securities and exchange Commission (SEC) can define it as a share. The source of the publication said that all attempts Ripple to withdraw its asset to major exchanges failed because of these fears.

"Although the token is not proof of ownership of Ripple shares, a close relationship with the company raises concerns that the authorities will consider XRP a security," the publication says.
Of course, the response was massive discussions on social networks.

The argument against Ripple: critics believe that the SEC will approve the definition of XRP as a security, since the initial launch and distribution of the asset is largely a variation of the ICO model.

Indeed, when the XRP registry was created (then renamed the Consensual ripple registry), tokens were distributed among users of popular forums about bitcoin according to a scheme quite similar to airdrop.



Some comments point to another, controversial, but still worth mentioning nuance: ripple management allegedly tries to mention XRP more often when its price increases.

Critics have noticed that once XRP attracts more attention, developers try to strengthen it by "flaunting" the token in front of the audience. For example, in a recent interview with Fox News, brad Garlinghouse touted XRP as "a new class of assets" capable of solving "the global problem of payments."

At the same time, as soon as the quotes fall, XRP references from the developers also become smaller. Disgruntled users believe that if Ripple really considers XRP an important component of its products, it should constantly promote it (within the limits of securities legislation).

The argument in favor of Ripple: from the point of view of the rest of the users, the issue of SEC intervention is not relevant.

First, the Ripple business does not directly affect XRP quotes, although the demand generated by large banking corporations that use the registry for international payments certainly benefits the asset. Thus, according to Ripple supporters, the platform has always had a clear task — to make financial products faster and cheaper.

Second, not all Ripple employees are unsure of XRP status. Many leading programmers and researchers consider XRP a token, even if the company does not behave in public so definitely.

Banks do not need XRP
Ripple has always advertised itself as a partner to banks and other major financial service providers, however many critics believe that the company has not given its customers any weighty reason to use XRP.

At the same time, many corporations began to use all three Ripple products — xRapid, xCurrent and xVia — this year. Several financial institutions and payment systems have started testing xRapid, the only Ripple product associated with the use of XRP.

The argument against Ripple: skeptics argue that Ripple will not be able to establish cooperation with most major institutions. Even the current Ripple partners claim that XRP is too volatile and risky a "currency" to use right now.

The crypto-investor and essayist under the pseudonym P4man claims that the two concepts that Ripple is trying to combine can only work separately. RipplePay, invented before cryptocurrencies, allowed local communities to better control their finances and as a platform for the movement of amounts within the trust network of users did not raise questions. Bitcoin, in its turn, is a new type of digital money that does not provide for control.

But their combination, which Ripple is trying to create, just does not work, the investor claims. Rather, it is like a super-complex system that as a result does not support the expected cheaper, faster payments.

Further, P4man expresses a rather bold idea: the only purpose of XRP — to make money for Ripple, has not yet subsided cryptomania; and this, according to him and other users, confirms the fact that Ripple and related funds own 60% of the total stock of XRP.

The argument in favor of Ripple: Ripple and its supporters believe that banks still have a reason; more precisely, that the company can create it. Often, products on the XRP register are compared to a Trojan horse; and once the Ripple "horses" are placed in a sufficient number of banks around the world, the XRP will hit an unsuspecting financial system.

This is already happening: Ripple already assures its partners that use the xCurrent, go on xRapid for incremental liquidity.

Chief cryptographer ripple David Schwartz (David Schwartz) explained in detail this position in the post on XRP Chat, arguing that with the growing number of "corridors" in which the startup, increases the usefulness of XRP.



"Let's say you have an international company like Seagate, which makes payments around the world. If you need to send funds through our corridors to five countries, it is logical that you would prefer one handful of XRP to five handful of different currencies," he added.
And while he admitted that Ripple was trying to do "a pretty insane thing," Schwartz continued:

"If it works, the value of Ripple will increase significantly."
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