By Margarita Vznuzdaeva
June 30th, 2018

Ripple as an alternative to bank industry – possibility or a limitation

You probably know Ripple (XRP) as the third top cryptocurrency, according to CoinMarketCap. But this digital coin is more about “blockchain solution for global payments”, meaning it is both – a cryptocurrency and a blockchain-based network for money transfer. CEO Cris Larsen and CTO Jed McCaleb (well-known as creator of  MtGox) are two people behind OpenCoin – a company developing Ripple’s protocol.

Trivia about XRP

  • Only 100 billion XRP tokens have been produced with 61 billion owned by the Ripple platform;
  • XRP is a cryptocurrency transferred peer-to-peer, leaving mediators out from the equation;
  • XRP digital security are not just big words as the absence of intermediary completely prevents manipulations and deception;
  • XRP has good scalability: it can process as many transactions as Visa if necessary, which is  more than 50,000 per second;
  • Ripple’s transaction costs remained inexpensive with respect to the increasing cost of transactions in the bitcoin system.

A bit about the Ripple network

Open-source payment system helps its users avoid third parties during money transfers: commissionless operations between different banks, no transfer delays, no fees and exchange rate caused money value loss.

Ripple is designed to connect different payment systems together
(David Schwartz, chief cryptographer of Ripple)

Cryptocurrencies becoming an ordinary part of human life and a regular measure of payment is not the only reason Ripple might turn into a bank industry alternative. According to the Coindesk statement, Ripple network allows different currency money transfers: dollars, euros, pounds, yen or bitcoins. Moreover, now they are trusted, supported and used by several banks like UBS, Royal Bank of Canada, Axis Bank, Union Credit, Santander, NBAD allowing them to save about 4 dollars per transaction.

The Ripple critics

Nevertheless, the Ripple network has been facing some serious criticism. Mostly, it is connected with the decentralization issue, questioning how can XRP be called a cryptocurrency if its blockchain platform is controlled by OneCoin founders?

(source: Twitter)

The fact that Ripple is labeled as a “cryptocurrency” and included on sites like CoinMarketCap has been, for the most part, seen as misleading and inaccurate for many years now. The fact that Ripple is labeled as a “cryptocurrency” and included on sites like CoinMarketCap has been, for the most part, seen as misleading and inaccurate for many years now
(Reddit user thieflar, a moderator of the Bitcoin subreddit, said to Inverse)

Back in January 2018, Nate Popper, the New York Times journalist, suggested that XRP is simply a tool for speculation and has little purpose in the real world, as stated by Fortune. That statement turned into a Twitter squabble between the Ripple CEO Brad Garlinghouse and the journalist.

Later in February, Ripple  was criticized by one more popular business: an exchange desk called BitMEX. The core points were pointing to visibility of its decentralization, lack of new special characteristics followed by unstable and untrusted network architecture.

“…does not appear to share any interesting characteristics with crypto tokens like Bitcoin or Ethereum, at least from a technical perspective…”
“…centralise towards a few large banks and fail to be sufficiently different to the existing financial system…”
(The excerpts from BitMEX conclusions, source: https://blog.bitmex.com/the-ripple-story/)

David Schwartz, chief cryptographer of Ripple, didn’t fail to reply to BitMEX tweets.

Moreover, the mentioned company created all the coins before the cryptocurrency’s launch and still owns more than half of the total supply. This question still has no verbal answer, but silence makes this clear: Ripple continues to be presented on crypto exchange markets.