Community Manager at Prasos Bitcoin Broker Believes XRP is Not a Cryptocurrency
According to Pessi Peura, the Community Manager at the Finnish broker Prasos, XRP lacks many of the features related to virtual currencies. The information was released in a blog post on February 11.
Cryptocurrencies have been created to be a decentralized way to send and receive payments. Bitcoin (BTC) and Litecoin (LTC) can be considered decentralized digital currencies since there is no central authority that controls the network. Miners process transactions and allow the network to run in a decentralized way.
However, there are some digital assets that seem not to be considered cryptocurrencies, such as XRP. Although most of the community believes that XRP is a cryptocurrency, Peura thinks that this virtual currency cannot be considered one.
About it, Peura commented:
“What differentiates XRP from cryptocurrencies is that it is not based on the blockchain, it is not mined and it is heavily centralized. Ripple network is a suite of different applications by Ripple Labs. XRP is the currency of the Ripple network, which the apps use.”
According to Peura, Ripple uses a method called HashTree to confirm and secure transactions, which is not blockchain. Additionally, this method has been patented by Ripple Labs. Furthermore, there is just one company developing the services and products offered by Ripple. Indeed, he says that if the central organization Ripple Labs is compromised, the whole network becomes vulnerable.
There were several reports and comments regarding Ripple being centralized. They say that Ripple Labs owns around 60% of the whole Ripple supply and that it is not possible for individuals around the world to mine the currency.
Ryan Zagone, the Director of Regulatory Relations at Ripple commented that the currency (XRP) is not controlled by Ripple. He said that they have a concentration of ownership but they do not control the platform, which is open-source and he claims it existed before the company. Most of Ripple supporters say that if the company goes away tomorrow, XRP would continue to exist and work without any problems.
Although Peura says that XRP is not a “cryptocurrency” he believes that the company is able to offer solutions to different companies and firms all over the world to move funds for a lower cost and faster. Using XRP it might be possible to connect new institutions and countries without having to go through the old networks such as SWIFT.
Ripple claims that other digital assets are centralized. Bitcoin works with miners that operate all over the world. However, most of these miners that confirm transactions are located in China. Due to this situation, Ripple believes that Bitcoin is centralized and it is subject to a single point of failure if the government in China decides to shut down mining operations in the country.
Clearly, if that happens, the market would be affected, but new miners would start to enter the space from all over the world. At the moment, XRP is the third largest digital asset in the market. Each coin can be purchased for $0.302 and it has a market capitalization of $12.45 billion.