Is Ripple Overvalued, Centralized or is XRP the Next Largest Digital Currency?
Ripple is a digital asset that tends to generate lots of controversies around itself. Ripple is a company located in San Francisco that has been expanding around the world offering cross-border payments that are faster and cheaper than other solutions such as SWIFT.
There are several companies that are starting to use Ripple’s products. Santander Bank or American Express are testing different services provided by Ripple.
The company entered the market back in 2004 as RipplePay and it last until 2012. The intention was to provide individuals with a peer-to-peer network to loan each other. The project was highly criticized due to the fact that large banks were finding some challenges to authenticate some trustful networks.
As soon as Bitcoin (BTC) stated to grow back in 2011, Ripple’s demographic moved towards Bitcoin. Blockchain technology was providing something similar to what Ripple wanted to achieve. Ripple’s native currency, the XRP token, was released later in January 2013 operating in a network similar to the one that Bitcoin had.
Some individuals claim that Ripple is a centralized company and payment system. Indeed, BitMEX conducted research on the matter, concluding that the system was centralized due to the fact that the company had complete control of the future of the ledger.
One positive thing about having a more centralized system is the fact that companies can move forward faster than other decentralized networks. Thus being able to solve problems in an easier way than other projects.
Ripple has been working not only with private companies but also with central banks from all over the world. This close relationship between Ripple and other financial institutions is a positive sign of how the cryptocurrency market continues to grow in different sectors. Nevertheless, critics said that this shows that the network is just more vulnerable to centralization compared to other decentralized projects such as Bitcoin.
Ripple’s market capitalization has been always scrutinized by several companies. Indeed, there is a very large gap between those that believe that the market cap of Ripple is smaller than what it really is and those that say that CoinMarketCap displays a smaller cap.
According to Yahoo Finance, XRP has a market capitalization of $28 billion, almost half the market capitalization that Bitcoin has. Meanwhile, CoinMarketCap shows that Ripple has a market capitalization of $11.89 billion.
Now, following a recent report from Messari, the market capitalization of XRP may be overvalued by around $6 billion. That means that the gap between the lowest and highest estimations of XRP’s market cap is $22 billion. Messari says that the data gathered has been taken from crypto exchanges and third-party cryptocurrency data services.
Ripple has also shared a report in which they informed that token sales fell compared to the third quarter. During the third quarter of 2018, Ripple sold $163 million in XRP tokens while it sold $129 million during the last quarter of 2018.
Ripple has more than 200 companies working with its services. As per the firm, they are signing 2 or 3 new partnerships per week with other financial companies. Ripple is recognized for the efficiency that it has to process cross-border payments, but it has also received many critics.
It works in a different way than Bitcoin but it has several positive things to take into account for the future. At the moment, XRP is being traded around $0.287.