The XRP Narrative (and why it's not like Bitcoin)

The narrative of how Ripple is going to “revolutionize” money is one that continues to return every cycle ever since the XRP Ledger first went live in 2012. For those still early on in their Bitcoin journey, this article discusses how Bitcoin differs from XRP and why this distinction is necessary.

The Origin Story

Ripple as we know it today has a rather convoluted backstory. The company was initially created as RipplePay back in 2004, where the primary use case was centered around digital payments. The company was then sold in 2012 and renamed “OpenCoin” after which the founders turned it into a blockchain based protocol with its native digital currency being called “Ripple”. In 2013, the company rebranded again to Ripple Labs, and then in 2015 again, this time dropping the “Labs” to become what we know today as Ripple.

Interestingly, the initial thesis behind OpenCoin was to create a more ‘sustainable’ version of Bitcoin - this narrative is something that is incredibly popular even to this day, where we see numerous protocols attempting to replicate Bitcoins success. Cardano, Bitcoin Store of Value and even Bitcoin Gold have all sought to (unsuccessfully) accomplish a similar mission but have lacked the requisite adoption necessary to achieve success when compared to Bitcoin.

How Bitcoin differs from XRP

When launching Bitcoin, Satoshi Nakamoto made a public and open invitation for any and all interested parties to begin testing the network by mining the very first Bitcoin blocks. Even though the only interested parties at the time were a relatively niche group of cryptographers, there was no unfair advantage given to any one party, ensuring universal and fair access to the Bitcoin blockchain from day one.

Conversely, Ripple was “pre-mined”, meaning all 100 billion XRP tokens were effectively “printed” (similar to the way the Federal Reserve prints dollars) without the public or any outsiders knowing!

Reportedly only three or four people knew about the launch, which turned out to be the founders themselves (big shocker). The very Cantillon Effect that Bitcoin seeks to eliminate was the core feature of XRP from the very beginning.

To this day, most of the 100 billion supply of XRP is still held by Ripple Labs, and they are released over time to bank partners and sold on the open market to investors (often without abiding by SEC guidelines). There have also been reports of Ripple using these tokens to fund their marketing machine, holding lavish conference events to promote the illusion of a flourishing ecosystem.

These Ripple “partner banks” have included well-known names from all corners of the world, including Bank of America, CUALLIX, PNC, Santander, SBI Holdings and Standard Chartered.

While the data citing bank settlement volumes across the Ripple network remains murky at best, what is equally unclear is the underlying need for a “utility” token such as XRP. Why does the network require a token for the ecosystem when fees can readily be paid to the banks in fiat, just like they did for almost a decade before launching the utility token?

In contrast, Bitcoin has no CEO, insider ownership, or pre-mine. To promote a fair and equal market, no insiders received any token distribution.

It was deemed a fair launch which, for the first time in history, gave the world a payment settlement network that could cross borders without the need for consent from a third party. Satoshi created a truly “peer-to-peer electronic cash” system as the white paper dubbed it, giving anyone the freedom to send Bitcoin without reliance on a bank or payment processor.

Source: Bitcoin Whitepaper

In an attempt to remain competitive, XRP soon tried to duplicate many features of Bitcoin’s open-source code and revolutionary capabilities, including cross-border payments. And because Ripple lacks the decentralized process of mining that gives Bitcoin its censorship resistant and fully transparent nature, using XRP can (sometimes) be faster and less expensive than using Bitcoin at the base layer.

What Ripple did not retain was Bitcoin’s permissionless nature, censorship resistance, or universal accessibility. If Ripple’s idea of empowering banks with blockchain technology is realized, then using XRP for purchases would likely remove all the benefits of self-sovereignty the Bitcoin network provides.

XRP was designed to be used mostly within the system of banking or government control, just like a debit card, meaning people worldwide without normal bank accounts would most likely be excluded from owning or using XRP.

In fact, Ripple has openly marketed their technology and services to entities looking to create and promote central bank digital currencies (CBDCs), which Bitcoiners and freedom loving individuals everywhere have long been opposed to.

Conclusion

• Controls the past - by having premined the entire supply of XRP and by removing the first ~32,000 blocks of transactions to due a “bug”.

• Controls the present - by controlling the “trust level” it maintains over the validator network that approves new transactions.

• Controls the future - by using its ability to control the available token supply, its influence over the validator network, and even arbitrarily changing the code outside of their formal amendment process.

Bitcoin’s decentralization from day one ensures that no one is in control of the past, present, or future of the asset, the ledger, or the network. It allows anyone to join the network, and by doing so reclaim full sovereignty over their time and energy.

Computer scientist and early bitcoiner Hal Finney once said that “The computer can be used as a tool to liberate and protect people, rather than to control them" Bitcoin realizes this ideal, while the same cannot be said for XRP, which places the same tools in the hands of those who wish to control others.

Important note: These materials are for general informational purposes only and do not constitute financial, investment, or professional advice. Cryptocurrency investments involve significant risks, including potential substantial financial loss, and we do not endorse specific investments, tokens, or projects. Always conduct your own research and consult qualified financial or legal professionals before investing, as Omni.app disclaims liability for any losses arising from reliance on these materials to the fullest extent permitted by law.