'So Wait - Is Ripple Centralized After All?' - Bitcoinist.net

‘So Wait – Is Ripple Centralized After All?’


It seems the cryptocurrency Ripple XRP is downgrading its user services again. The exchange Ripple Trade that allowed users to trade between fiat and the digital currency will be ceasing services in a few weeks. Users of the virtual money were not too pleased with the latest announcement that caused a giant dump on the market. Over the course of this week, XRP has lost 21% of its value according to CoinMarketCap.com. Ripple’s announcement states:

Thus, in the best interest of the Ripple ecosystem, we are discontinuing support for Ripple Trade in early 2016. The exact date is to be determined as we’re focused right now on providing a smooth a transition to new wallets and gateway services for Ripple Trade customers.” ~ Ripple Support 

Also read: Minnesota Commerce Commissioner Mike Rothman Warns About Bitcoin

UnknownRipple has had its fair share of controversy throughout its inception. From its initial start, the digital currency was created by Ryan Fugger and formerly called Ripplepay. Interestingly enough the concept was established in 2004 roughly four years before Bitcoin’s creation. In 2012, Ripplepay was rebranded by Jed McCaleb, and the name changed to Ripple. This gave the currency a push in value as the tokens price went up. However, many things have happened to the currency shaking its core as a unit of trade. In 2014, the currency took an extreme dive as Jed McCaleb was rumored to sell off his shares of 9 Billion XRP leaving the team for his own venture Stellar.

The currency is called a real-time gross settlement system (RTGS), currency exchange and remittance network all in one. Throughout 2013, the digital currency was adopted by many financial institutions to help with remittance issues. One of the first banks to adopt the token was Fidor Bank in Munich and following this came Earthpoint, which opened up XRP to certain Bank Of America and HSBC outlets. As the Ripple economy began to grow larger, it had worked itself all the way to being the second largest digital currency market cap just under Bitcoin. Currently, XRP still holds this position at a market capitalization of USD $226 Million.

In 2014, the currency had continued its operations to become a bank-to-bank model involving itself with many institutions and also following regulatory policy. At the end of the year, the gateway XRP users had used in the past to sell the token for fiat called Ripple Trade, has now revealed its own policy towards its users. The platform would require verified identification in order to operate its system. This had created quite a stir in the decentralized community as sell-offs started occurring again dropping the tokens value.


Jed McCaleb

Following this identification request the Ripple community was faced with yet another hardship. It seems the digital currency has always had a method of centralization and could freeze users accounts. In April of 2015 Ripple had convinced BitStamp to cease withdrawals of Jed McCalebs XRP stash in the amount of USD $1 Million. In fact, Ripples gateway had two forms of freezing users funds. They could halt use on an individual account anywhere in the network and also perform a global freeze. The Global Freeze as it’s called can cease all trading action throughout every wallet within the network. This would require users to migrate to other wallets if someone compromised the entire system said the company.

Now with XRP ceasing its Ripple Trade operations users are again getting upset. As Ripples forum announcement says they are still alive and focusing in on legacy banking institutions saying, “We hope you continue to help grow the Ripple ecosystem alongside our path of integrating banks!” Community members on the Ripple subreddit were astounded by this information. One observer feels that Ripple is not a peer-to-peer market but slowly becoming a bank-to-bank operation. The company has given users no clear reason to why it’s stopped Ripple Trade only explaining via its blog and by email:

We are discontinuing operations of rippletrade.com.” ~ Ripple Support

rippletradeOver the course of this week in December, the XRP value took an extreme dive within the trading markets. XRP bag holders were extremely upset with this announcement as they posted throughout all of the tokens forums angry. One user writes, “I hate to say it, but this makes ripple sound like elaborate scheme. Do we have an offline wallet ?? I mean you are telling us we have to send our Ripples somewhere before a few weeks time, or we lose our ripples which probably doesn’t matter anymore anyways the only thing we have been seeing coming from Ripple is DOWNGRADES.”

The currency has had many ups and downs throughout its life, and this news comes as a blow for users. Many have been scrambling to sell off their XRP for fiat at Ripple Trade as it’s currently still operational and at alternative venues for Bitcoin. It’s not the end of the currency, but many feel the organization is downgrading its features for individual users and giving more attention to its bank clientele. One redditor comment via the top /r/ripple post gets the highest comment on the thread; the commenter writes, So wait – is Ripple centralized after all?”

What do you think about the digital currency Ripple XRP? Let us know in the comments below. 

Images courtesy of Redmemes, and Wiki Commons

Jamie Redman

Jamie Redman is a crypto writer and a dragon on Tuesdays. Follow me on twitter @jamiecrypto

  • The forum post you quoted shows the lack of understanding of the network. In fact all ripple holders were glad they took this drastic step and in the long run Ripple will overtake Bitcoin. There’s a reason why bluechips are investing in Ripple and NOT in Bitcoin. Bitcoin is driven by pure Chinese greed.

    There is a reason why Microsoft is investing in Ripple and Ethereum and NOT Bitcoin. Bitcoin is fundamentally flawed and is ONLY good as a store of value, nothing more. It’s slow and will never become mainstream. Yes, if you want to make money, Bitcoin may be a good investment but only based on rarity and not because Bitcoin will be adopted by companies and/or consumers. Bitcoin is wasting resources with its outdated Proof of Work model. It’s insecure and flawed (double-spending) and will be a technology of the past by 2020. Yes, the blockchain is revolutionary but the competing blockchains are far, far superior, capable of storing data and contracts. Bitcoin will never get there.

    Bitcoin is driven by ideology – when that dies off and investors realize its flaws, stakeholders will dump Bitcoin as quick as they accumulated it. The chance that you lose money on Bitcoin is very high. Diversify. Hold some Bitcoin if you like for speculative purposes but in this fast-changing industry you need to look elsewhere for growth. And as a matter of fact, Ripple is doing the right thing by focusing on banks, because that’s how you will get real consumer adoption. The keyword here is compliance. The intrinsic valuation of the Ripple network exceeds 1 billion.

    I only regret that Ripple hired a lousy PR person. If I were part of the Ripple management I’d hire a competent PR person who knows how to handle announcements. You first announce something positive (overdeliver!) and then mention the “bad news” in a short but precise byline.

  • And by the way, Bitcoin is more centralized than Ripple will be in the future. I am not going to explain why but you only need to look at the difficulty chart to realize that only a few big players will be left by 2020, making Bitcoin more centralized than Ripple will ever be. So please do your research and realize how many flaws Bitcoins has. It’s value is driven by rarity and the costs of creating it (mining one coin). ASICS will flood the market again next year and the price could deteriorate just as quickly

  • bruno cecchini

    Ripple and Bitcoin are so different, is useless to put them inside the same context, obviously Ripple is a business that build protocol for their customer that as nothing to do with Bitcoin being a PoW SHA256 peer2peer protocol.

  • Explore the alternatives and I mean really conduct some research and invest money and time into other currencies and you will quickly notice how flawed Bitcoin is. I am specifically not saying it’s a bad investment. For all I know it may go to $4000, but it will not change the world. Other blockchains are more eco-friendly and have far superior storage capabilities. And yes, you cant compare the target audience of Bitcoin and Ripple but in some way you can. Bitcoin will never be embraced by banks – the only sound conclusion is that it will never reach consumers, whereas Ripple is doing the right thing by embracing banks and compliance. Without compliance Bitcoin will die a slow death anyway, shut down by the government eventually. The risk to lose tax money is too big. Compliance is key as long as we are living in a capitalistic world. Bitcoin will simply never get there. I wish it was different, but I’m a realist. I would like to see Bitcoin succeed but the chances are close to 0.

  • Marko Domanovic

    Oliver, I don’t know how can you stand behind centrally issued currency when we have such a wonderful democratic thing called Bitcoin. Yes, Chinese are making 60% of them but it’s a free mining market everybody is free to join. XRP is just a classic fiat in the form of crypto and such as, it has no future.

  • Marko Domanovic

    Such defetism will only lead us to our own demise. Pushing Bitcoin as a tool for healing terminally ill worldwide economy which is nothing but a farce is a noble thing to do. And if we all work at it, we can maybe finally see change, expell the banking cartel and free the people. Aren’t you feeling repulsive when you think about the current system? It seems like you’re understand it well, but maybe you’re dependent on it? Maybe you’re one of the parasites of our society if you defend banks and governments so well?

  • bruno cecchini

    It is what it is, for the rest I don’t mind I just want create/use the most richness protocol for the right purpose. I know about almost every protocol up there and none of them have the *universal* title so we can continue to work hard to solve the matter. Don’t lose your time with Bitcoin maximalist and focuse on what matter for yourself and even more important what matter for the end user.

  • Carl Weathers

    Everyone is free to join? What a crock of schit. 99% of Bitcoin is owned by less than 100 people. Bitcoin is a monopoly