As the third largest cryptocurrency by market capitalization, the XRP Army likes to fantasize about the dethroning of King Bitcoin. Why this will never happen – and Ripple still has his permission.
The crypto market is a narrative battlefield. As an example, this is revealed in the dispute between Bitcoin (BTC) and Bitcoin Cash (BCH): Some say that BTC, as Sound Money , must first of all optimize its suitability as a store of value , ie its value memory function . The others consider e-commerce as the most prominent use case for crypto-currencies – and thus build BCH so that the Coin optimizes with the help of low transaction fees. The narrative is incompatible and so the dispute thus breaks the boundaries of good taste.
Bitcoin and ripple are in similar relationship. Why the two top cryptocurrencies solve completely different problems and coexistence is still possible.
Ripple CEO performs in front of Carstens & Co.
“We sell our product to banks, solving the problem of cross-border cash flows,” said Brad Garlinghouse, Ripple CEO, summarizing the value proposition of the California firm. Garlinghouse praised the promises of integrating ripple products into the international financial system at his appearance at the 9th High-Level Conference on the International Monetary System in front of a decorated audience – including IMF Chief Economist Christin Lagarde and Chairman of the International Settlement Bank on.
With ripple, according to Tonus, bank-to-bank cash flows would be “up to 1,000 times cheaper and 1,000 times faster than SWIFT.” XCurrent, Ripples messaging service, is SWIFT 2.0, Garlinghouse said.
The product of a profit-oriented company that wants to compete with SWIFT. So far so good. Competition is stimulating the market, and anyone who has ever tried to make a standard transfer to cross European borders knows he needs to update. If Ripple is able to meet the promises of its xCurrent and xRapid product lines, cross-border payments could soon become cheaper. So far no objections.
Ripple is not decentralized
From then on, the narrative begins to crumble. Because Ripple tries to suggest using XRP, that it has set up a decentralized product that competes with Bitcoin. But XRP is neither decentralized nor does it solve the same problem as Bitcoin. Because xCurrent works completely without tokens – for interbank payments, it does not need an XRP. Only with xRapid the token comes into play, but that is hardly used. Although the US company has already brought a number of well-known financial institutions on board. However, XRP does not play a role in any of the partnerships.
This reveals the problem: the value of the token is fundamentally linked to business performance. The more partners Ripple pulls, the higher the chance that XRP will one day benefit. This has nothing to do with decentralization. Furthermore, Ripple always acts as a control instance in the network with the Unique Node List (UNL) and determines the consensus rules.
Bitcoin has no CEO who demonstrates the benefits of a cryptocurrency to a bank elite. And yet the lead is considerable. BTC’s market capitalization, at $ 140 billion, is about nine times higher than XRP’s.
XRP is not money
XRP has a very specific purpose: to make cross-border payments as cheap as possible. Bitcoin, on the other hand, is nothing less than the largest macroeconomic experiment in human history. It is an attempt to establish an apolitical, universal resource that works independently of any centralized entity. Private money has never had as much of an opportunity for enforcement as it does now.
The transparency and decentralization of the network means that people will trust Bitcoin over time as a store of value more trusted than established Fiat currency. Confidence arises solely from the core attributes that make up Bitcoin: decentralization, inviolability of the blockchain and fixed inflation. Especially the latter view many as Bitcoins central value proposition .
XRP transactions may be faster than Bitcoin transactions. However, it is not enough to take out an attribute, to optimize it and thereby push BTC from the throne.
Statements like Garlinghouse’s that built XRP as “the answer to scalability inefficiencies” lack any understanding of what Bitcoin is. Because BTC is not a technological, but a monetary phenomenon.
Bitcoin does not optimize for speed because it does not have to. BTC is optimized for security, the immutability of the blockchain and for decentralization . While Ripple is competing with SWIFT, Bitcoin is competing with nothing less than a paradigm: the myth that only state currencies can be good money.
As an alternative to the dusty payment network SWIFT Ripple has his permission. Whether and how the XRP token will last in the ecosystem depends solely on the company itself.
However, as an alternative to the fiat money system, Bitcoin is optimizing for the big implications: zero interest rate policy , inflation , currency pluralism and the power overhang of the US dollar . With all this, BTC competes. The question of what the crypto community should focus on at this early stage is unnecessary.