Of all the critical factors that make cryptocurrencies what they are, decentralization stands out. Yes, decentralization simply means that the cryptocurrency doesn’t require any third parties or central authority to determine how things are done within the ecosystem. However, there is a debate about Ripple (XRP).
The multiple lawsuits against XRP have sparked an online debate if it is a cryptocurrency or a digital fiat. Not to mention that observers still await the US Securities and Exchange Commission (SEC) to release an official statement. They want to know whether Ripple is a security or not. Indeed, these are trying times for Ripple as it has three class action lawsuits in different courts in the US.
Adding to the scandal rocking the cryptocurrency is the CEO of Elpis Investment, Anatoly Castella, who claims that XRP is not a digital currency but a digital fiat. Castella doesn’t seem to have nice words for Ripple as he insists that XRP is no virtual currency. He argues that it takes the architecture of a financial technology platform that offers a seamless union between the cool elements of fiat currency and blockchain technology. Castella posited that given the behavior of the Ripple platform, it is safe to infer that it is a digital fiat and not a cryptocurrency.
He hinged his argument on the comparison of XRP with Bitcoin and Ethereum, faulting the standard of XRP. Furthermore, he says that unlike Ripple, Ethereum and Bitcoin are a store of value asset. Castella insists that XRP is a digital fiat supplied by Ripple.
Is Castella Right? Ripple Analyzed
To be sure, let’s understand what a cryptocurrency is. It is a digital currency that has no regulatory authority, but uses a decentralized system to maintain its records, ensure the creation of more units and relies heavily on cryptography to eliminate double spending.
The big question now is, does XRP have all these features? Brad Garlinghouse, the founder of Ripple, is clearing the air about the centrality or otherwise of XRP. In his words, Garlinghouse made it abundantly clear that his company doesn’t mint XRP anymore; it merely issues existing ones. In fact, he disclosed that the company “cannot” create additional XRP, adding that it can function perfectly with or without Ripple because they are entirely separate entities.
What Does The SEC Say?
Well, the SEC has indirectly weighed in on whether cryptocurrency is a security or not. The head of the agency, Jay Clayton, told CNBC that they are replacements for fiat currencies. Though, regardless of what anyone thinks about Ripple, it must be made clear that it’s designed and developed to change the financial services industry, and it is doing a good job at that.
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