Bitcoin Global News (BGN)
January 29, 2019 -- ADVFN Crypto NewsWire -- Ripple, and their
native cryptocurrency XRP are one of the oldest and well known
blockchain networks. Upon launch of the coin, Ripple endorsed their
network as a bridge between the tradition financial system and the
burgeoning fintech industry. The two founders of the company are
Chris Larsen, who is one of the most wealthy people in the world,
and Jed McCaleb, who was the creator of Mt. Gox Bitcoin Exchange.
Mt. Gox was one of the first Bitcoin exchanges, and has since been
shut down and involved in numerous lawsuits.
Ripple vs.
XRP
It’s important to understand the
distinction between Ripple and XRP. Ripple is a financial services
company, which created their own cryptocurrency - XRP. The value of
this currency is not directly tied to the performance of Ripple as
a company, and in fact is not a required part of Ripple’s
services.
And unlike other popular
cryptocurrencies such as Bitcoin, Litecoin or Ethereum, it is not a
truly peer-to-peer network. And because of this, it allowed Ripple
to distribute the tokens to their own employees and other specific
financial institutions. A recent study looks deep into these
choices, and questions if the market cap value and trading volume
of XRP are truly accurate.
Selling
Restrictions
The circulating supply of XRP is
delineated as 41 billion tokens, however because who is holding
large chunks of those XRP, the true liquidity could be as low as
19.2 billion XRP according to the study. It’s known that at least
6.7 billion XRP are held specifically by Ripple’s co-founder Jed
McCaleb and 2.5 billion are held by Ripple’s associated non-profit
RippleWorks. Another 4.1 billion XRP were put into use for Ripple’s
money services business, making them subject to selling
restrictions.
The report takes these estimates
one step further to content that the actual market cap value of XRP
would be significantly lower. The potential is that if all of those
billions of XRP are in fact inaccessible to retail investors, they
can’t be counted for the overall value of XRP’s market cap.
Spokesperson from Ripple disputed Messari’s findings:
“Not only does this report contain
several inaccurate assumptions around lockups and selling
restrictions, the entire report is based on an incorrect
calculation of market cap. While decentralized digital assets like
XRP are different from traditional equities, the term ‘market cap’
is always a very simple calculation: current price X total number
of the asset = market capitalization. That puts XRP’s current
market cap at approximately $31 billion. We believe that any other
calculation of market capitalization for XRP is not a clear
representation of the truth.”
Regardless of the market cap value,
there are still issues with liquidity and where the trading volume
data is coming from:
“Ripple has not shared the
methodology or reference exchange data it uses to calculate trading
volume for XRP, a critical data point that drives selling
restrictions. More than 99% of XRP trading volume appears to come
from overseas exchanges, many of which have been suspected of wash
trading”
By: BGN Editorial Staff