5 Ripple (XRP) Myths you Should Stop Believing

By October 5, 2020October 7th, 2020No Comments
5 Ripple Myths you Should Stop Believing

There is no dearth of rumours and outrightly ridiculous claims that slander/malign the cryptocurrency space. But some misconceptions originate at a fundamental level.

They stem from a basic misunderstanding of a particular crypto asset’s underlying protocol, market valuation and the people/organizations associated with it.

XRP is one such cryptocurrency that has been a butt of many myths and misrepresentations. Let’s look at them in detail.

XRP Is The Next Bitcoin

Ripple’s cryptocurrency XRP is not the next bitcoin, as the XRP community has cried out umpteen number of times. It was never meant to be.

According to the San Francisco based payments firm, XRP is meant to act as a “bridge currency” for global banks, payment processors, and other financial institutions.

The token is intended to be used to settle cross-border payments faster and more cheaply than current international payment networks. According to Ripple’s website, the XRP Ledger that runs XRP can settle 1500 transactions per second with a $0.0000542 with a transaction fee. This is not possible on Bitcoin.

Also, the XRP ledger doesn’t employ proof-of-work mining, which positions it and XRP, diametrically opposite to Bitcoin.

XRP Is Not An Actual Cryptocurrency

Two words make up the word cryptocurrency – ‘crypto’ and ‘currency’. Crypto stands for cryptography. A cryptocurrency uses cryptography-based encryption to successfully secure, conduct, and validate monetary transactions.

No individual or organization controls the creation and issuance of cryptocurrencies as they exist on distributed, decentralized networks called blockchains.

XRP ticks all the above boxes.

The XRP ledger uses a consensus mechanism that is different than proof-of-work (PoW) or proof-of-stake (PoS). Additionally the blockchain uses far less electricity than competition-induced networks.

There is no competition and no rewards in the XRP Ledger but it is still is a blockchain and XRP is a cryptocurrency.

Ripple Control’s XRP’s Price, And Can Print As Much As They Want

If Ripple would have had control over XRP‘s price, the token’s price today would be way over $1. It’s true that the company holds a major part of the XRP supply.

But Ripple cannot access most of the supply, due to a smart-contract-based escrow lockup, that is programmed to release 1 billion XRP tokens every month.

The move to put 55 billion XRP into escrow was made public in May 2017 and came into effect on December 2017.

Also, Ripple has been transparent about the total quantity of XRP sales. The data is open for public viewing on the official website.

Apart from this, the XRP supply is fixed at 100 billion and there is no way to program the minting of more XRP tokens. If that happens, it would require a major change in the source code.

The XRP ledger is decentralized and no single authority can decide to do it.

XRP Is Too Volatile For Banks To Use

Issues pertaining to volatility arise when assets are bought and held for extended periods of time. Ripple’s proprietary service for banks and financial institutions – xRapid and On-Demand Liquidity does not require them to hold XRP.

Banks use xRapid by buying and selling XRP to settle payments in the shortest possible time.

An average xRapid payment takes minutes, so the window of volatility is almost non-existent. This is because of the speed with which XRP can settle transactions on the XRP ledger, which is about 1500 transactions per second, closing a new ledger every 4 seconds.

XRP Transactions Involve Hidden Fees

Just like using any other blockchain network for monetary transactions, using the XRP ledger also involves a fee. XRP users decide the cost of that fee.

Validators on the XRP ledger prioritize transactions based on the fee amount. Hence, a higher fee guarantees a faster transaction.

Unlike other blockchains, validators don’t receive the XRP transaction fees. Instead, the transfer fees are burned, making XRP a deflationary currency.

These were some misconceptions regarding XRP. If you know more of them, do let us know in the comments below. Also, if you want to know how to buy XRP with INR, check out this link – https://blog.wazirx.com/how-to-buy-ripple-xrp/

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