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Why XRP(Ripple) is not a real cryptocurrency

November 22, 2018 02:16:15

Bitseven.com - After Bitcoin gained some fame, new virtual currencies began to appear on the market. Most of them have some features that distinguish them from other cryptocurrencies. Some digital assets do have such distinctive characteristics that community members even have doubts about whether they can be considered real cryptocurrencies. One of the most famous coins around which such discussions arise is Ripple or XRP.

Ripple and XRP

Many community members mistakenly believe that Ripple and XRP are the same thing, but this opinion is far from the truth. In fact, there is a company Ripple Labs Inc. that is the сreator of the eponymous payment system called Ripple. The payment system itself is distributed and has an open source code. And XRP is a unit of account that is used within the Ripple payment system. Thus, we can conclude that the Ripple payment system is definitely not a cryptocurrency. And what about XRP just arises the majority of disputes and misunderstandings.

Why XRP is not a cryptocurrency

First of all, you need to understand that the Ripple payment system was not created by the example of Bitcoin (unlike all other crypto-currencies), but by a completely different principle.

One of the main differences between XRP and other cryptocurrencies is that it is not distributed among the entire community, and for the most part (60% of the coins) belongs to the company Ripple Labs. Also, XRP is not possible to mine, and the creators of the payment system originally produced the all emission. In addition, these same creators can censor transactions and accounts at will, or to put it simply – they have the ability to cancel any transfer or block any account in the Ripple system. These factors indicate that XRP is a centralized unit of account. That is, in fact, every user of this system is forced to simply trust the administration.

However, full control of XRP by its creators is not only a matter of trust in the company, but also a problem of stability of the system. The fact is that Ripple is a regular legal entity that must strictly comply with all laws, otherwise the company may be forcibly closed. In the past, there were a number of centralized payment systems that enjoyed trust among many users (E-gold, Liberty Reserve, Tencent and many others), but at some point were closed by regulators. In the case of Bitcoin, it is its decentralization - this is the main reason why it did not suffer the same fate.

Development of Ripple does not mean the growth of XRP

This year Ripple announced many partnerships with large companies, including banks and other financial institutions around the world. But so far we cannot say that it somehow significantly affected the price of XRP. The fact is that partners are primarily interested in the technology of fast and cheap transactions, including international ones. However, the use of this technology does not imply the use of XRP, and partnerships are unlikely to have a positive impact on the course. And even on the contrary-news about such partnerships provide additional opportunities for market manipulation.

Conclusion

Ripple - it is generally quite high-quality technology, which may have some prospects in the future. The XRP coin itself has also earned the trust of the community, and is consistently included in the top3 of cryptocurrencies by capitalization. But from a technical point of view, not XRP, let alone Ripple, cannot be considered a full-fledged cryptocurrency.


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