Despite the rest of the authors on this publication looking favorably at XRP and Ripple in general, I have a different view of this project and will try to convey my concerns regarding the project in a series of articles, this being the first.
I won’t be making a big introduction about what is XRP, who created it and what is it supposed to do. You probably know all of that already. Let’s dive in straight into the disquieting part. This article and others will rely heavily on research of other people, whose work will be cited here.
With a total of 99,993,093,880 Ripple (XRP) coins supply and a daily circulating amount of around 38,739,142,811 coins. The company still has 55 billion coins, translating to about 60% of the total XRP produced to date, deposited in escrow. Ripple was pre-mined and the creators have only released a portion of the coins to be publicly traded.
There is 38 billion XRP in the hands of investors and Ripple business partners throughout the world. If you’ve been following the legal proceedings between Ripple and R3, then you’re probably aware that these two organizations were arguing over 5 billion XRP through the courts. [EDITED with info about the settlement]
In a brief statement published in September, Ripple announced the settlement, stating that the terms would remain confidential.
“R3 HoldCo LLC, R3 LLC, Ripple Labs Inc. and XRP II, LLC announce that they have reached a settlement of all outstanding litigation between the parties. The terms of the agreement will remain confidential and both sides look forward to putting these disputes behind them.”
The terms of the lockup provide that each month, Ripple will be “sent” 1 billion XRP.
Now, to the concerns I had, through the mouth of another author:
“Through some effort, users can go download a wallet and transfer Ripple to it, but you have to create trust lines with other organizations in order to get access. In this way, you can’t just send money to whomever you want, they have to accept you as trustworthy before allowing transactions. In other words, they control the servers that allow transactions. Isn’t that what centralization is all about?
You invest your hard-earned Fiat or BTC into a token for which Ripple Labs never paid a dime to create.
100% of the tokens were created out of thin air, while the majority of the supply is still in control of Ripple itself. The network is privatized, meaning that not everybody can participate in the systems, as trustworthy nodes are “selected”, which is the basic definition of centralization. If we think that further, in actuality you are buying worthless air, and make the creators incredible rich at the same time, while hoping someone will pay you more for the air of yours than you paid for in the first place.
If we think that further for a minute… if Ripple controls the “nodes” and are theoretically capable of denying specific transactions, what is the difference to traditional Fiat system we are currently entertaining? It is nothing more than Fiat 2.0, the re-creation of the old system supported by new technology. Same story, just a different disguise.”
The above paragraphs are taken from an article I found to be mirroring my thoughts to almost 100% so I relayed them entirely. These are all valid questions and despite seeing XRP holders and defenders do some creative mental gymnastics while patrolling social media for “XRP haters and attackers”, I still fail to see valid argumentation that refutes any of these claims.
Yes, tokens are in escrow but they still belong to a single entity that controls that escrow and that defined the rules of that escrow. If they defined the rules once, they can redefine them whenever they want again. They created them out of thin air, 100 billion tokens that once reached almost $4 per token which is insane when you think about it – hundreds of millions of people work their whole lives and they never garner $400 billion in value, altogether.
And it wouldn’t be that big of a deal if XRP actually had any value (right now, perhaps it will have value and use case in the future). But this was all based on nothing, on pure speculation and greed of the buyers. Greed and hope for the greater fool to come along after them.