Most bitcoin skeptics come from traditional finance, such as banks and venture capital. Ripple CEO Brad Garlinghouse now joins them, claiming that bitcoin is like Napster – a necessary and transformative fail. He believes his company’s XRP coins are superior. But is he correct or just pumping his own cryptocurrency.
Ripple CEO
Brad Garlinghouse, Ripple CEO. The Failure of Napster. Napster was not intended to be a business when it was first created. Napster was a piece software that allowed anyone to download and share MP3 files regardless of copyright. It was a tool that would eventually lead to the many peer-to-peer filesharing networks that are now omnipresent. This allowed the free and instant distribution of copyrighted songs to anyone and everybody in the world, in a largely anonymous manner.
Napster didn’t last forever. It was forced to close down by the music industry. Napster’s legacy is still alive and well. Consumers have changed their expectations of the music industry, and no longer expect to need to purchase $20 CDs to get music.
Napster was briefly reintroduced as a legal compliant paid music service for a short time, but it quickly died.
This is how Ripple CEO Garlinghouse views bitcoin. The technology is important and transformative, but it will end up dead if regulators fail to engage with it to solve a real problem.
Superior?
Ripple’s XRP is superior to Bitcoin? Garlinghouse claims that Ripple’s Ripple’s cryptocurrency XRP is not only superior than bitcoin because it appears to be in compliance with regulators (despite having been sued for securities fraud earlier in the year), but also because it is somehow more financially or technologically advanced. Garlinghouse gives the classic example of bitcoin coffee buying. He claims that bitcoin transactions take 20 minutes and that the transaction fee would make coffee more expensive than buying it.
Garlinghouse doesn’t seem to be familiar with SegWit or Lightning Network. These technologies allow for bitcoin transactions to be significantly faster and cheaper. While a bitcoin transaction may take several minutes to confirm it does not mean that it takes 20 minutes for it to appear on the Blockchain and be a reliable indicator that funds have been sent.
Let’s See
During a speech at MIT, Andreas Antonopoulos, a well-known bitcoin commentator, spoke about the true nature and validity of bitcoin confirmations.
I would sell someone a cup coffee with zero confirmations. I would sell someone flat-screen TV. There are many more. One confirmation. Two confirmations. Perhaps a flat-screen TV with a fancy screen or a car that is affordable. Three confirmations is a good sign of a nice car. Four conformations are a fighter jet. Five confirmations are required for an aircraft carrier.
This means that stores could sell a cup of coffee to someone at zero confirmations. This means that a cup of coffee can be sold in a matter of seconds, not 20 minutes.
Lightning Network makes things even more impressive. Transactions are completed in a matter of seconds and cost less that a penny, especially when Lightning Network is involved.
XRP Still Lacking Real Use Case
Let’s look at the utility of Ripple’s cryptocurrency XRP in comparison to bitcoin.
Bitcoin can be used to make a variety of purchases. You can even use bitcoin to purchase gold and silver directly. Bitcoin is the most widely accepted cryptocurrency in the world. It can also be used to buy gold and silver directly online with fiat currency.
Ripple, Worth the Hype?
Let’s now look at Ripple. Its XRP currency, which was originally created to facilitate bank-to bank payments, has never been used by any bank. Ripple is not accepted by many businesses or stores as a payment, nor is bitcoin. Coinbase, an exchange that sells Ripple directly for fiat currency, has a similar problem. A small number of ATMs sell Ripple directly.
Bitcoin is light years ahead of Ripple in terms of adoption. Ripple’s XRP cryptocurrency, which was intended to be used by banks, has not been realized. Furthermore, no bank has expressed any interest in using XRP for anything. Ripple has not been able to sell any other technologies that they have developed, and these technologies are not related to cryptocurrency. The company stated that they were partnering with MoneyGram (not a banking institution) in January. However, the public has yet not heard if this partnership led to any real world transactions.
He Who Controls the Coin
Ripple’s XRP coin and another important point to be mentioned is that it is completely dominated entirely by Ripple. Ripple, the company, and its advisers, have billions of XRP coin. Ripple is a central company with a centralized network and a largely central blockchain.
This is bitcoin. Bitcoin is not controlled by any one company. Bitcoin transactions can be mined and processed around the world because its network is more decentralized than Ripple. Bitcoin is arguably the most secure cryptocurrency due to its wide support from miners.
The most important thing to remember is that bitcoin is not subject to artificial restrictions or controls. There are billions upon billions of XRP coins waiting to flood the market. One of the key points of cryptocurrency is the fact that there should not be a central authority manipulating the supply. Ripple and its XRP coin have a central authority that has almost unlimited power to manipulate the supply of bitcoin on a market.
Where is the Truth?
Ripple and its XRP currency may seem very promising to many investors. Bitcoin, on the contrary, is already available every day processing real-world payments and transactions. XRP coins are not being used for anything other than speculation by investors. The Ripple corporations’ attempt to tie cryptocurrency in a suit and tie with the XRP coin. Although the technology is still in its infancy, it is advancing at an increasing rate. But so far, no major bank seems interested.