Ripple’s XRP has always been subject to controversy and conflicting opinions. Many people see it as a cryptocurrency, albeit it cannot be clearly defined as such. Elpis Investments CEO Anatoly Castella confirms XRP is not a real cryptocurrency, and its current dip is only to be expected.
The XRP Price Drop Is Very Steep
All cryptocurrencies, assets, and tokens have had a rough 2018. Any positive momentum is quickly followed by even bigger dips. Prices for Bitcoin and altcoins have plummeted by 60% or more compared to their all-time high in early 2018. Ripple’s native asset is no exception, as it has dropped from $3.40 all the way to $0.48 in very quick succession.
Such a dip is to be expected. The digital asset industry is extremely volatile, first and foremost. This means dips and highs can occur at any given time and in spectacular fashion. Bitcoin is still more valuable than it was around the same time in 2017. People tend to overlook that fact during these bearish times. The same applies to XRP, which was worth a lot less in mid-July 2017.
Future optimism is very different for Ripple’s asset, though. It has become subject to an official SEC “investigation.” There are multiple claims that this asset is a security and needs to be treated as such. It has not done the XRP price any favors over the past few months. This current decline has a lot of investors worried, for obvious reasons.
Ripple’s Asset Is Not a Cryptocurrency
Until the SEC clarifies its stance, Ripple’s asset remains subject to discussion. Elpis Investments CEO Anatoly Castella has a clear vision on this matter. He claims XRP is not a real cryptocurrency and should never be looked at as such. It is a financial means for the native fintech platform which supports blockchain technology.
From a regulatory perspective, Ripple’s asset is in trouble as well. Castella claims XRP will miss out on the regulations which will propel cryptocurrency into the mainstream. Instead, Ripple’s asset may warrant its own regulatory guidelines as a “digital fiat.” That may be difficult to achieve, as it is not pegged to the USD value like a stablecoin.
It is important to distinguish between cryptocurrencies and assets. Bitcoin is a cryptocurrency, whereas Ripple has a digital asset. It was never designed to be a Bitcoin competitor, mainly because it has a completely different business model. Castella says:
Ripple cannot be compared to BTC or ETH. When bitcoin was originally created, it was designed to be a store of value. When you created a transaction, you were sending a store of value to another account – for payment for goods and services. Miners created nodes on the network to process transactions and were compensated with this cryptocurrency, either through fees or mining rewards.
He added:
Ripple has no mining or miners whatsoever. Instead, transactions are powered through a ‘centralised’ blockchain to make it more reliable and fast. XRP was mined all at once by the parent company – Ripple Labs Inc – with a majority of the cryptocurrency held by them.
If the SEC categorizes ripple as a security, we will experience in the short term a big dip in its market value. In the long term it will simply become a digital asset owned by institutional investors.
The perceived centralized nature of Ripple and its ecosystem make it completely different from cryptocurrencies, Castella concludes.
Do you agree with Castella’s view on Ripple? Let us know in the comments below.
Images courtesy of Shutterstock.