Last Name 1

Covalent

Class Number

May 7, 2018

Argumentative Essay

Ripple, abbreviated XRP, is a form of cryptocurrency that operates differently than its

competitors. Ripple is like other cryptocurrencies in the sense that it relies on a distributed ledger

network that requires different parties to participate to validate transactions. This is as opposed to

the standard currency our society uses which relies on a singular centralized authority. The

cryptocurrency has gained the attraction of many investors and entrepreneurs and their opinions

have been expressed, both good and bad. Ripple can be considered a poor cryptocurrency due the

fact that it is decentralized and has an extremely large number of tokens in circulation. Despite

this, Ripple does have certain benefits that could make it an appealing investment and form of

currency in some societies.

Cryptocurrencies were established to provide a form of payment that would not be

controlled by one entity, in this case the government of various countries. The number of

regulations that Ripple has emplaced completely defeats this purpose. Ripple is based around a

shared and public database which uses a solidarity process that allows for payments, exchanges

and fees. Based on this evidence, Ripple cannot be considered a real cryptocurrency, since those
 Last Name 2

who own XRP are at the mercy of the company and its many regulations. “To achieve this goal,

the Ripple Foundation created XRP but tweaked each traditional component of cryptocurrency

into an almost unrecognizable state.” (Liebkind, 2). Ripples attempt to enter its own niche and

serve as a form of payment between fiat and cryptocurrency is sketchy and unappealing. The

reason the cryptocurrency movement exists is because of the power in the banking system. By

using public databases and monitoring its client’s transactions and personal information, Ripple is

moving our society in a backwards direction. It wouldn’t be unlikely for Ripple to make its

regulations stricter as they grow, since they know they have control over those who invest and use

their currency. "Ripple’s big bet is that XRP will become a “bridge currency” that many financial

institutions use to settle cross-border payments faster and more cheaply than they do now using

global payment networks, which can be slow and involve multiple middlemen. " (Orcutt, 8). For

this reason, Ripple should be disregarded as a good cryptocurrency, as it shares the same ideals as

standard forms of payment issued by the government in modern society.

If the notion that Ripple is not decentralized is not appalling enough, it also has no mining

capabilities. Mining capabilities, first seen in bitcoin, allow users to mine the cryptocurrency by

solving algorithms. This created a fair and rational way for the currency to be distributed, however,

Ripples method of token distribution is completely different. "In Ripple’s setup there are no

miners; all 100 billion coins of XRP that exist were created when the network launched in 2012.

Its creators kept 20 billion and gave the rest to the company. Since then, Ripple has been

“methodically” distributing tokens to clients, but it still holds nearly 50 billion in an escrow

account" (Orcutt, 1). To begin with, the fact that the company itself owns roughly 60% of the

tokens is frightening. If there ever came a point where they would need to sell their shares, their
 Last Name 3

“dump” would be strong enough to single handedly drive the price down more than ever. It is also

difficult to trust someone who has granted so much of their “cryptocurrency” to themselves. This

is a selfish act and does not demonstrate qualities you would look for in a company. The founders

and operators did not work for their share of tokens, and thus, they cannot be trusted. It is a very

reasonable assumption that a “whale,” or in this case, the creators of Ripple, would sell of all their

shares at all time highs while utilizing insider information. Aside from this, the fact that

cryptocurrency cannot be mined is a major flaw. The reason Bitcoin has been so successful in the

past is because of its unique method of distribution. Though Bitcoins motifs are completely

different from the standard currency system in place, it does share the similarity that new money

is constantly being introduced into circulation.

Despites all the flaws in Ripple, it does have some useful applications. "By comparison,

Ripple, by its own admission, has scaled to handle 1,500 transactions per second, which is over

200 times more than bitcoin's blockchain. Furthermore, these transactions settle in an average of

four seconds, and they're considerably cheaper" (Williams, 6). The speed and low transaction cost

of Ripple is something that cannot be ignored. When comparing to Bitcoin, it’s fees are

substantially less, with Bitcoin fees soaring upwards of $30 in recent years. In addition to these,

the fact that Ripple is cheaper and more abundant makes it appealing to those who are new to

cryptocurrency.
 Last Name 4

Ripple is a new currency that has gained the attention of many individuals, though they

should be skeptical of investing in the currency due to various factors. The number of token in

circulation and the fact that it is not decentralized are reasons why it is not a good and functional

form of cryptocurrency. While it may be bought, sold, and traded on a large scale, it will never

share the ideals of cryptocurrency.

 Last Name 5

Work Cited:

Liebkind, Joe. “Why Some Claim Ripple Isn't a 'Real' Cryptocurrency.” Investopedia, Investopedia, 14
Dec. 2017, www.investopedia.com/news/why-some-claim-ripple-isnt-real-cryptocurrency-0/.

Orcutt, Mike. “No, Ripple Isn't the next Bitcoin.” MIT Technology Review, MIT Technology Review, 12
Jan. 2018, www.technologyreview.com/s/609958/no-ripple-isnt-the-next-bitcoin/.

Williams, Sean. “Here's Why Bitcoin Should Be Terrified of Ripple.” The Motley Fool, The Motley Fool, 12
Jan. 2018, www.fool.com/investing/2018/01/12/heres-why-bitcoin-should-be-terrified-of-ripple.aspx.