Ripple token XRP on icecubed

Ripple token XRP

Ripple token XRP in ICE³X? We have had many requests by users about if we will be adding XRP to the exchange.

Our stance might change in the future, but presently we consider the Ripple token XRP to be grossly overvalued. We feel XRP is a centralised token and unfairly distributed (when compared to the majority of other cryptocurrencies). Our belief is that outside of massive market speculation, there is virtually zero use case or demand for XRP by end users, and therefore think the Ripple token XRP is not a good fit for us.

The Ripple token XRP price is potentially in a bubble. This bubble was created by buyers who believe the token will be used by all the banks one day. There is also “Fear Of Missing Out” of something that could be big, instead of for the legitimate reasons.

The banks that have signed an agreement with Ripple (which has directly influenced the XRP price) will use xCurrent, a product by Ripple which does not use the Ripple token XRP.

We don’t believe in adding a token that most users will trade purely for speculation. This is really nothing more than gambling with your funds. We only want to list tokens that are useful and that there is a demand for, in the real world, by end users.

Challenges in adding a new token to the exchange

There is many behind the scenes infrastructure changes and challenges that go into adding a new token to the exchange. The work and resources involved in updating the exchange, adding helpdesk solutions, training of staff, the setup of wallets and systems for XRP, as well as website updates and testing the platform, needs to be justified. Simply adding a token because it might make money, is not an option.

There are many believers of the XRP token, and right now we are not one of those and don’t feel it worthy to commit the resources to add it onto the iceCUBED exchange at this point. Right now we would feel more comfortable adding tokens such as Bitcoin Cash (BCH) or Cardano (ADA), that users have been asking for.

What is Ripple?

Ripple logoRipple is a system for money transfer that connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one friction-less experience to send money globally.

The aim of Ripple is to be a global settlement network, which will allow anyone to transfer money in any currency in a matter of seconds, using the Ripple Connect platform.

XRP is the virtual currency and is central to the Ripple infrastructure, but XRP is not a store of value or a general medium of exchange. Instead, the XRP currency actually primarily functions to mediate between other currencies on the Ripple network.

What is Ripple Connect?

Essentially the Ripple Connect platform uses digital fiat sent using Inter-Ledger Protocol (ILP) to transfer a fiat currency value across payment networks (This is basically like a payment channel between different ledgers, it is similar to lightning for bitcoin).

It is important to note that this platform of money transfer does not use XRP, and banks who use the platform will not buy XRP to use the Ripple Connect platform at all. As far as banking applications of the Ripple system are concerned, there is no need for XRP as it is not needed by the Inter-Ledger Protocol.

Here is a video by Ripple of Tim Wan, director of innovation at ATB financial performing a live transaction from ATB to Reisebank, using the Ripple Connect platform (note they are not sending XRP token for the settlement)

The Ripple Network and its software can work independently of the XRP digital currency. Brad Garlinghouse, CEO of Ripple has stated:

If Ripple disappeared today the Ripple token XRP would continue to function.

There are 3 sections to Ripple Network Solutions:

  • xCurrent is Ripple’s enterprise software solution that enables banks to instantly settle cross-border payments with end-to-end tracking. (Does not use XRP)
  • xVia is for corporates, payment providers and banks who want to send payments across various networks using a standard interface. (Does not use XRP)
  • xRapid is for payment providers and other financial institutions and uses XRP to offer Banks on-demand liquidity to service cross-border payments. have stated:

Built for enterprise use, the Ripple token XRP offers banks and payment providers a reliable, on-demand option to source liquidity for cross-border payments.

XRP is built for enterprise use, to help with cross-border payments on the xRapid system. Banks, payment providers or institutions that need to purchase XRP, do so by purchasing it directly from Ripple, instead of through an exchange. This means that even if banks do indeed adopt this system, and need large amounts of XRP, their demand will therefore not directly influence the markets and the price of XRP on exchanges.

Ripple centralisation:

centralized rippleWe believe XRP is centralised as it is minted and distributed through a single entity, and has a central point of failure, the Ripple company.

100 billion tokens were created, and of that, 20 billion XRP are retained by the creators, who were also the founders of Ripple.

The creators gave the remaining 80% of the total to Ripple Labs. The intention: “to incentivise market maker activity to increase XRP liquidity and overall health of XRP markets.” This, of course, worries investors of XRP as it is a way to manipulate/influence the market price of XRP.

Current Ripple distribution:

  • The Total XRP held by Ripple: 6,253,949,032
  • Total XRP placed in Escrow 55,000,000,000
  • Total XRP Distributed 38,739,144,847

Ripple has attempted to alleviate concerns surrounding the XRP supply by committing to place 55 billion XRP into secure escrow. The escrow will allow them to use up to 1 billion monthly and return the balance at the end of each month. This action of committing funds to escrow in itself has an influencing effect on the XRP market.

Of the total XRP distributed, there is a lot of concentration of high values in a few accounts:

  • 66.0% of the total XRP are in 10 accounts.
  • 80% of the total XRP is in 20 accounts.
  • 90.6 of the total XRP are in 50 accounts.

Combined with the high volumes distributed to only a few accounts, and when compared to the vast majority of other cryptocurrencies, this centralisation and manipulation of the supply and therefore influence over price, is generally what you would typically see in pump-and-dump tokens and scams.

Consensus in XRP

ripple consensusRipple us a Unique Node List (UNL) for their consensus algorithm, which is far different from that of a Proof Of Work (POW) consensus algorithms such as bitcoin or many other cryptocurrencies. The only way to achieve consensus is to use a UNL that contains some of the same nodes as other UNL in order to prevent a double spend. Currently, the default UNL encompasses five core validators which are all run by Ripple.

To prevent a double spend, there needs to be at least 1 node that is the same in each UNL. So that there is an overlap in node lists. Using a completely different UNL list without a common node means you can easily fall out of consensus with the rest of the network that is using UNL with an overlap in nodes that can agree. Moreover falling out of consensus could split you off onto a separate “Ripple” chain, and can lead directly to a loss of fund. Some early transactions of XRP are missing from the main Ripple blockchain. This is because there has been some falling out of consensus in the past, and transactions on those ‘chains’, are therefore not in the current main chain.

Where is the risk?

Since Ripple themselves run nodes, the least risk option is to use Ripples UNL and let them take all the risks as it to everyone’s advantage to use the same UNL. There is no real incentive like POW to run a node, so the only ones that are running are Ripple and by the bigger partners on the network. Ripple is slow to add new nodes to the UNL primarily because these validators must be trusted entities that stay in consensus with Ripple itself.

What this means is that Ripple being common on all node lists and issuing the recommended UNL, essentially controls the consensus of the transactions. They can technically freeze funds or make other changes. They have in fact spun this to users this as a feature on the platform(the ability to freeze non-XRP balances).

The freeze protocol extension gives gateways the ability to…freeze funds issued to a particular user. You can only sen Frozen funds back to the issuing gateway. The global freeze feature allows a gateway to freeze all balances issued by it.

Buying Ripple XRP

Since we feel that XRP consensus and distribution models, as well as what we think is “pump and dump” demand, we will not be adding XRP to the exchange at this time. There does not appear to any real Ripple market, or ‘use’ for Ripple outside of speculation for the public who hold XRP tokens, and we are passing on this one.

We encourage users to make their own decisions and if you would like to purchase XRP, you can do that on another platform recommended by Ripple. You can follow the instructions Ripple have provided to buy XRP here.

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Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.