Saturday, January 13, 2018

This is a pretty good read on Ripple (XRP), and I find it refreshing to see this point put out there in a blunt and direct fashion: Ripple is not the next Bitcoin (BTC).

As the article describes, its purpose and therefore its inner workings are wholly different than that of BTC. XRP is made specifically to work in a way that traditional financial institutions can use it, given all of the regulations they must operate under.

MIT Technology Review: No, Ripple Isn't the Next Bitcoin

However, the article leaves out two points about XRP and the existing order it is designed to disrupt that are crucial to understanding its future value prospects:

1) All of the XRP that will ever exist was created on day one, unlike most crypto currencies, however, every time a transaction occurs in XRP a tiny bit of it is "burned," destroyed permanently, thus increasing the scarcity of XRP over time; this is "mining" in reverse;

2) Existing money transfer networks require large pools of capital that be kept idle on the sending and receiving ends just in case a transfer order comes through the institutions involved (termed, "nostro" and "vostro" accounts), which XRP eliminates the necessity of; these pools represent trillions of dollars globally, which would be freed up for other uses and at least in part used to purchase XRP.

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