A cryptocurrency exchange based in Finland has recently claimed that XRP is not a cryptocurrency and that it is heavily centralised by its parent company Ripple. This news surfaced a day after the crypto exchange-listed XRP on its platform.
The Coinmotion exchange recently posted a blog post, just a few hours after listing the digital asset on its trading platform, with the title ‘XRP is a Centralised Virtual Currency’.
The post goes into detail on the opinion of the exchange operators that XRP isn’t a typical cryptocurrency and isn’t backed up by a traditional blockchain. It also says that it is massively centralised in the hands of a parent company, Ripple Labs.
“What one needs to know about XRP is that it is not cryptocurrency in the strict meaning of the word… What differentiates XRP from cryptocurrencies is that it is not based on blockchain, it is not mined and it is heavily centralized. Ripple network is a suite of different applications by Ripple Labs. XRP, is the currency of Ripple network, which the apps use.”
This is one opinion but it is shared by many people in the crypto community. Every few months there is another enthusiast or popular investor who attempts to reveal the ‘shady truth’ that XRP is a centralised asset rather than a decentralised one.
But as reported by CCN, the difference this time is that these allegations are coming from something that has something they could potentially lose.
The Finnish exchange doesn’t have anything to gain by spreading FUD about Ripple’s native token and the fact that they released this blog post contrasts with its listing of XRP, despite getting waves of demand from their customers in Finland. This only demonstrates how worried and concerned they must be.
At its core, Ripple is a payment network with the cryptocurrency XRP used in the said network which is operated by Ripple Labs. At the current time of writing, XRP is the third biggest cryptocurrency in space but we have seen the digital asset make some impressive surges in the past and was the second largest crypto in the space for a significant amount of time over the past few months but now it has sunk back to be the third biggest instead. Nevertheless, this is still an impressive feat for a ‘centralsied’ cryptocurrency.
There are claims that Ripple doesn’t use a blockchain to make secure transactions and instead uses a method known as HashTree which is actually patented by Ripple Labs.
As it says in the blog post:
“In HashTree all the transactions and balances are combined to a single number, which servers compare to each other to reach consensus. This kind of system is faster than blockchain, but far more centralized.”
The Finnish based exchange goes on to state the specifics for XRP’s supply data saying:
“XRP isn’t mined like typical cryptocurrencies. All 100 billion ripple coins have already been created. Ripple plans to release about half of them on to the markets while keeping the other half. Currently there are about 39% of ripple in the open markets, while 61% are kept by Ripple Labs.”
In addition to this, the control of XRP in the hands of a single firm amounts to a monopoly, one of which is antithetical to the standard principles of a cryptocurrency such as Bitcoin.
“Ripple Labs has also the control on how and when to release new ripple on the markets. This is strackly (sic) in contrast to how decentralized cryptocurrencies work: with Bitcoin everybody knows and agrees on how new bitcoin are minted. With Ripple it is the monopoly of Ripple Labs to make the decisions.”
How Ripple Could Fight Back
At the end of the blog post by Coinmotion, they finish by indicating that XRP could still succeed despite everything they previously said. Even if they don’t consider XRP to be a proper cryptocurrency or blockchain solution, it still qualifies as a modern fintech solution.
“As a centralized system it could also be easier to jump on than decentralized blockchain systems. Grand institutions such as large scale companies and banks are often quite conservative in adapting new systems. Centralized system might seem less intimidating than a decentralized one.”
By January this year, Ripple Labs announced the addition of thirteen more financial institutions to its RippleNet which takes the overall total to more than 200. During this time, the former chief technical officer of Ripple Jed McCaleb found the time to take a few digs at some of the competition by calling TRON “just garbage”.
In the last sentence of the article, Coinmotion simply put:
“Nonetheless since You, our dear customer, have asked for it, we have offered you the possibility to buy and sell XRP on Coinmotion.”
Sounds a bit dramatic to me but for all you investors in Finland, XRP is now available via Coinmotion.