Ripple May Win Its XRP Lawsuit Against The SEC, Here's Why I’m Still Not Buying It
Does XRP still have a Unique Selling Point?
Everywhere I look online these days, I only see good news regarding Ripple’s lawsuit against the US Securities & Exchange Commission (SEC).
According to several sources, it seems Ripple will finally win its battle against the SEC sometime in August 2022 — a victory that will come after two long years.
The idea floating around these days has been this:
“Should Ripple win (as it seems likely to), the price of its native token (XRP) will almost definitely go through the roof… it could even 10x from its current ~$0.70 to $6-8/token!”
Obviously, “crypto-influencers” had to chime in; and now they, too, have joined the party — recommending that their followers immediately go buy as much XRP as they could possibly get their hands on before the price inevitably skyrockets.
Personally? I’m not buying the XRP “hype train.”
Here’s why you shouldn’t either.
While I Believe Ripple Will Win Its Lawsuit, I Also Don’t Think It Will Be As Straightforward As Many People Assume It Will Be
In other words, the most likely outcome would be the judge handing a victory over to Ripple, but in such a way that allows the SEC to walk away with much of its pride, dignity, and reputation intact.
After all, in this golden age of freedom and accountability, you can’t make a government agency look bad — for being bad!
“But let’s imagine the best possible outcome for a moment, OK?”
What if the judge awards Ripple a clear victory and, even goes as far, as to publicly scold the SEC
for its bias and for wasting taxpayer money on vindicative score-settling and stifling business innovation in the United States.
This “triumph” will still be a bittersweet one for Ripple because, in any long and wasteful war, no side truly wins.
Ripple was thrown into the wilderness in the early days of the lawsuit — abandoned by both investors and strategic partners. Instead of focusing on innovation and building their products and ecosystem, the Ripple team had to dedicate their energy to fighting off the SEC inside and outside the courtroom.
While all this was happening, the rest of crypto flourished and matured.
“What if, we’ve all moved on since 2019 when XRP was the coolest thing in town?”
“What if, the demand for XRP has already been stripped away by newer cryptocurrencies?”
“Would XRP still thrive post-lawsuit in this new, advanced environment?”
These are the questions you should be asking before you commit to XRP in 2022.
Cross-Border Money Transfers Was Meant To Be XRP’s USP, But Can It “Really” Compete Against The Reliability Of Stablecoins In 2022?
XRP is a utility token meaning it serves some particular use case within a specific ecosystem. This use case is its Unique Selling Point (USP) and what makes an investment proposition, a lucrative opportunity.
XRP’s USP has always been that it is a currency that institutions in the traditional finance system could use to transfer funds across borders — reliably, quickly, and cheaply. Ripple’s clients were, therefore, never intended to be you and me.
Ripple’s clients are large institutions like MoneyGram and WesternUnion.
Unfortunately for XRP, Stablecoins (like USDC, BUSD, GUSD, and UST) have taken hold and become a large and important part of the crypto industry. Worst of all, is that they seem to fulfill XRP’s USP significantly better than XRP ever did.
Imagine you’re MoneyGram and you’re looking to send a large amount of money from one country to another. Would you, in 2022, rather use Stablecoins (which offer most of the advantages XRP boasts) or, use XRP knowing how vulnerable XRP is to price fluctuations?
Remember, that MoneyGram isn’t buying XRP as an investment because it believes its price will appreciate. It’s buying/holding XRP to USE when settling transactions.
Do you really want to settle transactions with a volatile currency? Does anyone?
Why not use a Stablecoin instead?
In a few days, I’ll be publishing a thorough analysis of Stellar’s $XLM token; explaining whether or not it is a good investment opportunity. Subscribe so you don’t miss it :)
Ripple’s Victory Will Be A Victory For Cryptocurrency, But Not For XRP
While I can definitely see XRP experiencing moderate, positive price action in the short-term following a victory against the SEC; I really don’t see XRP going anywhere in the medium or long-term —
unless Ripple somehow invents a new use case for it.
This is primarily because of the ground XRP has already lost to the Stablecoins.
What paints an even bleaker picture is that while Stablecoins continue to receive funding and investment, XRP’s strategic partners (who abandoned it in the early days of the lawsuit) haven’t shown any interest in re-establishing close relations.
In contrast, Circle (the company that gave us USDC,
saving us from USDT) has BlackRock’s support, which happens to be the world’s largest asset management firm.
In fact, just last week BlackRock led a funding round for Circle; raising $400M.
Though The Lawsuit May Have Been Unjust & Primarily Provoked By SEC Corruption, It Also Revealed All Of Ripple & XRP’s Glaring Flaws
Ripple claims it doesn’t control XRP. How genuine is this statement, however, when Ripple holds nearly 54 of the 100 billion max supply of the XRP token?
Does this inspire much confidence? Not really.
Perhaps more worryingly, is that RippleNet (the blockchain that XRP runs on) uses neither Proof of Work (PoW) nor Proof of Stake (PoS).
Instead, RippleNet makes use of a method known as a “Unique Node List” — a collective of 35 trustworthy nodes/individuals that Ripple selects or pre-approves.
The majority rule of that group is then what decides whether a transaction goes through or not. This, ultimately, makes RippleNet one of the most centralized blockchains out there as you’re essentially relying on the “good, honest intentions” of a few validator nodes/individuals.
What’s more puzzling, however, is that, unlike many other blockchains, there is no reward fee for running a validator node on RippleNet. This is something that creates more questions than answers in my poor little head.
“Why would anyone want to go through the expense of running a validator node?”
“How can we guarantee that they continue to be honest when there are no incentives?”
“What stops 18 of the 35 validator nodes from colluding and “hijacking” the blockchain?”
If any of you know the answers, please let me know in the comments below.
Thank you for reading.
Invest In Tomorrow.