Last week, there was another episode in the history of the controversial XRP token.
The SEC (Security and Exchange Commission) claimed that Ripple, unregistered, raised $ 1.3 billion in XRP sales in the US and worldwide, and because its founders owned a significant amount of the 100 billion units issued in 2012, it would be much more than a security (share) than a currency.
When an asset is considered a security or security, it is subject to inspection by a responsible body, implying specific rules in the way this security is offered and traded on the market.
The case may take years to resolve and it is unclear what else will unfold.
Some Exchanges have already delisted XRP, for fear that the SEC will win the lawsuit against Ripple Inc. and the consequences that this could have for the market as a whole. This caused XRP to fall by more than 50%.
SECURITIES OR NOT?
In recent years, the SEC has determined that Bitcoin and Ethereum are not securities, in part due to the fact that they are decentralized, with no person or company controlling them.
XRP is different, because while BTC and ETH are operated by mining, XRP is operated centrally, where transactions are processed and verified by specific servers, stipulated by Ripple Labs.
If you are just starting out on the market and for some reason found yourself attracted to XRP, know that it is a highly centralized token, whose founders hold a large amount of the total issued.
In total, there are 100 billion XRP's to be issued, but only 45,404,028,640 in circulation.
This means that Ripple Labs is in control of the remaining 55 billion XRP and the potential to dump it on the market at any time or do whatever it wants with these tokens and harm everyone who has invested in it.
And it was precisely this control of the tokens by the owners that made the SEC question whether the XRP was a currency or a security value.
XRP GOES AGAINST THE CONCEPT OF THE BITCOIN NETWORK
Founded in 2012 by Chris Larsen and Jed McCaleb, Ripple Labs is the technology company that develops the Ripple payment protocol. It allows banks, payment providers and other corporations to send money globally using blockchain technology.
Unlike Proof Of Work, a consensus system that ensures decentralization and network security, Ripple uses a system where special nodes decide which transactions are valid and which are not. Due to this centralization, the XRP token is extremely scalable and fast, being able to hold up to 50 thousand transactions, process 1500 transactions per second and confirm transactions in up to 4 seconds.
However, realize how the question of having a company behind and its owners own a large amount of tokens, as stated earlier, is already sufficient reason to understand that XRP goes against what cryptoactive products represent.
The same centralization that gives scalability, gives it several unique points of failure, being an easy target for attacks and arbitrariness. How confident do you have that the company that owns a large number of these tokens will not use this to abuse this advantage in its own interest?
Centralization is contrary to the concept of Bitcoin and cryptocurrencies, as power and corruption go hand in hand with control.
POWER TENDS TO CORRUPT AND ABSOLUTE POWER CORRUPTS ABSOLUTELY by LORD ACTON
WHY ARE INVESTORS INTERESTED IN XRP?
XRP ranks fourth among tokens with the highest market capitalization (US $12,778,897,355) and its current price is US $0.28.
Its low price attracts novice investors, who believe that it may come to appreciate a lot in the future. However, they forget or don't even know that the amount of XRP in circulation is 45,404,028,640 and the total number of units is 100,000,000,000 (one hundred billion) and that the price is formed by the following account: Market Cap / Total in circulation. So we have: 12,778,897,355/45,404,028,640 = $ 0.28.
Therefore, for the price of XRP to reach levels close to the price of Bitcoin, it would have to attract a market capitalization of many trillions of dollars, which is very difficult to happen.
You who are reading our report are totally free to trade the token you want, as our market is mainly about freedom.
But it is very important to know how to differentiate each of the implications, so as not to be caught off guard by movements like this. It is necessary to analyze the risks of being positioned in a token that can be easily impacted by any type of decision, be it political or not.
Anyway, the crypto ecosystem is so new and with so much potential that focusing on centralized and controversial projects like XRP can be a waste of your most precious asset: time. Know how to take better advantage of it, because there are promising and more disruptive protocols in the crypto-sphere.