What defines a cryptocurrency? If you look at the list provided by Coinmarketcap, you will see more than a thousand cryptocurrencies (some of them are alleged scams, beware). Almost all of them are open systems where anyone can jump in or jump out whenever they want, except Ripple (and maybe some other coins that I am not aware of). What is Ripple anyway?
Well, you can read a complete explanation through Wikipedia. There are several key concepts in Ripple that you need to understand:
- How to start using Ripple
- Who uses Ripple
- Consensus protocol
- How the coins are managed
First of all, it is amazing that Ripple is traded freely on several markets. As per my previous experience about 2 years ago when I tried to purchase some XRP (the code of Ripple’s coin), it is bloody hard to do it. Unlike Bitcoin or other common cryptocurrencies where you can create your own address, in Ripple you first need to register before using it. There are Ripple gateways you can use to register yourself and do all the KYC/AML procedures. It means you surely cannot do anything fishy by using XRP. I doubt that people buy XRP in those markets really want to use it for its purpose: remittance service between banks overseas. So it means all they really want is profit.
Second of all, there is a limited usage of Ripple. It can only be used by the registered users and companies (mostly banks) setting relationship with Ripple Labs as the owner of the protocol. It makes me wonder, whether Ripple really resembles cryptocurrency or just riding the waves of crypto money without really providing the basic characteristics of cryptocurrency: open system and anonymous (I understand the second characteristic is debatable, but let us leave it be for now).
If we know that Ripple is limiting its functions to only usable to send money from banks to banks, the next question in my head is: why the hell did they put XRP into cryptocurrency markets? By putting the coin to be tradeable in the market, it is likely that it will suffer a price volatility (and it is proven to happen, so far). Remember that the ones using Ripple are banks. Do you think these banks want to risk their money for such volatility? I do really mean that in a day the value could crash (although there is no doubt that the value increases from time to time). So, is it really that XRP is that useful for those banks? Or is it just an equipment to speculate in the coin markets while in the same time still complying with the KYC/AML regulations?
I admit that I am not a fan of a centralized consensus (or somewhat centralized consensus like the delegated ones), and unfortunately, Ripple is using one of these centralized methods. Several validators are chosen (perhaps by Ripple Labs) to validate new transactions and put them on a new block. The problem with these somewhat consensus protocols is that they can really pick up what transactions they deserve to be included first (without obeying the protocol; slightly modifying the protocol appears to be OK) or even omitting other transactions they do not really like.
I believe we cannot investigate who owns how much coins. The owners might have a significant portion of the total coins, and by using these coins, they can fully control the markets and use them for bringing more profits. I do not really think it is what the cryptocurrency community wants.
I haven’t heard about new inventions being brought by the Ripple community, other than spreading news that they open new branches all over the world or adding more banks on their list of “clients”. The most interesting thing about cryptocurrency is that everyone tries their best to offer new ideas to compete with each other and create a better product to be used for the community. Ripple does not do that from the very beginning.
I would say: avoid Ripple. It is too blurry and I cannot really decide whether Ripple Protocol is really a cryptocurrency or just a fake one.
What do you think? Write your comments.