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Setting the record straight: 6 XRP myths debunked
From time to time, Ripple gets questions about XRP, the digital asset native to Ripple Consensus Ledger (RCL). Ripple recognizes that distributed ledger technologies, digital assets, and consensus mechanisms are all complex topics, and is always happy to answer questions about how XRP works and its value in the global financial system as a result. However, recently there has been some misguided information being disseminated online which merits substantial clarification.
Myth: Ripple Consensus Ledger is centralized or a permissioned ledger
A permissioned ledger requires permission from some authority for access. The Ripple protocol is completely open and anyone can access the Ripple network without prior approval by Ripple or anyone else. With respect to centralization, the counterparty of a centralized ledger acts as a single point of failure for the ledger. Because RCL is decentralized, it can function without the participation of Ripple. Additionally, while Ripple provides validation on RCL, we do not manage the validation process nor do we run all the validators. MSFT and CGI are just examples of institutions running validators and validating transactions on RCL. Lastly, the Ripple network operates by the consensus of its participants. These participants can at any time choose which validators they use. As such, validation is ultimately in the hands of the network participants, not Ripple.
Myth: Ripple can increase the total supply of XRP beyond 100,000,000,000
There is no benefit to increasing the amount of XRP. This would destroy trust in the network and immediately make XRP worthless as no one would choose such a network. Furthermore, the ripple code is open source and can be audited by anyone – and it doesn’t contain any method to create additional XRP. As a result trust in the good intentions of Ripple is not necessary.
Myth: Ripple controls of the price XRP
Ripple does not control the price of XRP. We take the integrity of the XRP market incredibly seriously and would never do anything to compromise that integrity. In order to strengthen stability of XRP, Ripple is working toward increasing liquidity, payments volume, and low spread volatility. Our current off ledger liquidity building efforts speak very clearly to these goals. Also, it’s in Ripple’s own interest to promote the long term value of XRP. As such, any attempt to intentionally influence the short term price of XRP is nonsensical as it would imperil trust in the company and the asset.
Myth: There’s no bank use case for XRP
XRP has a clear institutional use case and ultimately, considerable value as a bridge currency. Going forward, XRP’s use as a value transfer mechanism will increase its utility which could translate to an increase in its value. To facilitate larger notional transfers by financial institutions XRP will necessarily have to be worth more. It’s important to note that while our ultimate vision incorporates XRP into global bank cross border payments via our Ripple solution, there are myriad scenarios and uses which are constructive to XRP.
Myth: It’s risky for liquidity providers to use XRP
We are in the process of listing XRP on several non-RCL exchanges. This will expand access to XRP, increase the liquidity needed for XRP to facilitate cross border payments, and will reduce the market’s dependence on gateways. Additionally, we will soon offer an XRP lending facility to qualified market participants. This allows liquidity providers to fully participate in XRP markets without necessarily having to own XRP.
Myth: The value of XRP is inversely proportional to the value of Ripple as a company – and Ripple’s traction with banks has nothing to do with XRP’s success as a digital asset
The long-term value of XRP will ultimately be driven by its adoption as a cross border value transfer mechanism. Though XRP has important attributes which make it particularly useful for this use case, these attributes do not ensure full integration with our enterprise software solution. Ultimately, XRP can be successful regardless of Ripple’s success. Either way, we continue to do everything we can to make sure XRP eventually becomes the digital asset standard for international value transfer.