Full disclosure - I do not own ripple. My decision has nothing to do with the idea that it's "a banker's coin".... my reasoning is I have no faith in it's fair market value (discussed later).
This will be a long post. Most of you won't read all of it. Very few of you will watch the video I'll provide.... and that's a shame. I support any decision to invest as long as the person making that decision has full knowledge of what they are choosing. I do, however, find it incomprehensible that people promote coins to others yet have NO CLUE what they are promoting. To me, that is sinful.
So....lets start with some facts about Ripple/XRP. (these are pure fact, not opinions)
"Ripple" is a company that offers banks a network to transfer money that saves them time and fees over current transfer solutions. "Ripple Connect" InterLedger Protocol (ILP) is the technology they use to transfer these funds. To avoid confusion, I will, from this point forward use RC to refer to the "Ripple Connect" technology, XRP to refer to the token and Ripple to refer to the company that owns both of them
XRP is a cryptocurrency created by Ripple that banks could CHOOSE to use, but have never used in the 5 years up to this point. They do not have to use XRP to use the "Ripple Connect ILP" transfer technology. XRP is a stand alone crypto that is fully independent of RC.
The value of XRP is not tied in any way to the success of the RC technology. The only way banks adopting Ripple's RC tech would make the coin value go up is if banks decided to use XRP to make transfers. Clearly, Ripple will advocate to banks to use XRP, but they have never done that to date. ----opinion-----There are many reasons they likely never will (that part is my opinion)
When you buy an XRP token, you are NOT investing in Ripple, the company. You are simply buying a cryptocurrency that seems to have low fees, fast transfer times and liquidity. But at what cost?... I'll speak to that later
Despite what may claim... no bank has EVER used XRP to transfer money. There are 100 or so banks testing the RC technology, but not using XRP to move funds. if you hear someone making this claim, they do not understand what they are investing in. There IS ONE financial service company in Mexico that recently started using XRP over the RC platform, but it's not a bank and it's not high volume.
Ripple is wholly centralized. They do not use consensus... they have a ledger and it records transactions. This allows for much faster speed as it doesn't require multiple validations of a block. Just like when Visa says you made a charge, RC says you made a charge and it's done. This is why its much faster and can handle more transactions per second... it does not rely on a decentralized blockchain. Just a ledger kept by Ripple. You may see that as a good or a bad thing....that's your choice.
The majority of XRP tokens are wholly owned by Ripple. They have somewhere in the neighborhood of 65-75% of XRP tokens. They have recently claimed to have put many of them into escrow and release 100million per month for the next 54 months. I do not know if they actually did, but that was the claim. Not sure how that changes things either, but ok.
Ripple DOES have major competition, but not from cryptocurrencies. R3 Corda, Hyperledger, the Ethereum Enterprise Alliance (EEA) and SWIFT are all permission based blockchains looking to service banks just like Ripple is. The difference is... Ripple is the only one of these services that offers it's own native asset, XRP. These services use Native Identity Management to secure their blockchain, not a native currency. This shows that the new companies (Ripple is 5 years old) are ALL making the decision to provide this service without a native currency. ------ opinion----- This is a clear indication of where the market is heading and doesn't necessarily bode well for Ripple's RC (opinion)
Jed McCaleb founded Mt. Gox, then Ripple... then left ripple to start Stellar. Watch the video I'll link below to learn about Jed and his involvment and decide for yourself it matters to you.
Ripple funds can be frozen by Ripple. Something not possible with a decentralized blockchain. This article mentions it. https://www.financemagnates.com/cryptocurrency/news/ripple-reportedly-orders-freeze-of-1m-worth-of-mccaleb-funds/
Below the dotted line are opinions and not pure fact.
My lack of faith in the market price of XRP has nothing to do with it being a central "bank coin". I am not aware of any bank buying any XRP coins and I'm fairly certain no bank has ever used XRP to transfer funds. The reason I do not trust the market price is my suspicion of wash trading.
When you have a centralized coin that's owned mostly by it's creator, they have the incentive and ability to artificially increase their market price by creating sale orders higher than current market price and then buying their own order. This is an overall profitable activity even if you account for exchange fees.... and its illegal in the securities markets, but not in crypto. My own personal suspicion makes me not trust the XRP valuation.
The following video should be required for anyone investing in Ripple. It's very technical and features two well known crypto folk.. Peter Todd (bitcoin contributor) and Tone Vays (trader and crypto expert). It gives super detailed insight into the XRP token and some of the negative issues surrounding XRP.
If you read all this, understand all the issues, and still want to invest in crypto, that's great. Every crypto has cons associated with it. It's up to each person to decide what risks they are willing to accept.
But please, if you still think banks are buying up XRP tokens to transfer funds for cheap....stop recommending XRP to others. We each have a responsibility to not promote investments we don't understand ourselves.
