Ripple outperformed Ethereum in terms of capitalization. How did this happen?

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2018-01-11
Ripple outperformed Ethereum in terms of capitalization. How did this happen?

The Ripple project appeared on the market in the mid-2000s, when Bitcoin has not yet been created. The decentralized payment platform was very unusual for banks and payment operators, so Ripple was developing slowly and was not popular. Only in 2011, the developers decided to revise the concept of the platform and decided to develop it in the other, cryptocurrency, channel. Ripple was aiming to eliminate SWIFT completely and to destroy the monopoly of transnational transfers using its own XRP token. But this project is not built on a traditional blockchain system as we understand it. Ripple uses technologies of its own design, this cryptocurrency is fully centralized, it is released in limited quantities and can not be devalued.

When creating the protocol, developers released 100 billion coins, the smallest part of which is now owned by the users. The remaining coins are distributed among developers, proxies and are on the purses of the company itself. For example, one of the founders and the former CEO of Ripple Chris Larsen owns 5.19 billion coins and 17% of the company’s shares, which is about $ 40 billion. Due to the confident growth in the cost of XRP, Larsen became the 15th in the list of the richest Americans, ahead of the former head of Microsoft Steve Ballmer.

“After moving most of the XRP to the repository, you can easily calculate the maximum offer that can appear on the market. Although Ripple has established itself as a responsible keeper of tokens, the freezing procedure will save investors from any fears about the overflow of the market. As previously reported, this scenario could have a negative impact on the company itself, “the report said.

In this case, only one-third of the coins issued are in circulation. In early December 2017, the project team said that it plans to freeze about 55 billion XRP tokens to stabilize the market and to start a “fair play” – traders feared that too many tokens could enter the market, which would lead to a significant drop in the exchange rate. This statement had a positive impact on the value of the coin, the volume of trading on the exchanges after the publication of the message reached $ 700 million, and the rate went up by 13% per day.

In the mid-December, the Ripple rate began to grow steadily, and by the end of the month it reached $ 2.9 per XRP – 13 times more than two weeks before. A powerful leap allowed the crypto-currency to take the second place in the capitalization list, displacing Ethereum, and the daily trading volume increased from $ 300 million to $ 11 billion.

The rise raised questions among many analysts and traders. One of the reasons for the excitement is the possible artificial “pamp” of the prices in South Korea’s largest crypto exchange Bithumb. Reddit discusses information from one of its South Korean forums, whose users have paid attention to the strange behavior of the exchange recently. According to traders, who use Bithumb, the exchange did not give an opportunity to sell XRP at a price below a certain mark, automatically canceling orders. Since Bithumb accounts for more than a quarter of the volume of XRP trades, the exchange can influence the average exchange rate of the token on the market and not allow it to fall below a certain level. So far, neither the exchange nor the Ripple team has commented on this, and the indignant Bithumb users are trying to get rid of the coins at a favorable rate in all possible ways.

Skeptics also note that Ripple is a private company that develops its technology. In fact, future development depends on what the project team decides, and, as mentioned above, it holds a larger volume of crypto-currency at its disposal.

However, the “rally” for Ripple is not over yet. In the near future, Ripple predicts the cooperation with Coinbase – the famous American stock exchange, which is the largest in the US. According to the experts, this event will certainly affect the course, provoking an exponential growth of up to 500%. Recall, until recently there were only be three cryptocurrencies on coinbase (Bitcoin, Ethereum and Litecoin), and the addition of Bitcoin Cash led to the closure of trading for a while because of the instant jump in the rate.

 

CRYPTOCURRENCIES
  • bitcoinBitcoin$5,083.45
  • ethereumEthereum$165.21
  • rippleXRP$0.328517
  • tetherTether$1.01
  • eosEOS$5.35
  • stellarStellar$0.115521
  • litecoinLitecoin$79.53
  • cardanoCardano$0.084586
  • tronTRON$0.026728
  • moneroMonero$67.88
  • iotaIOTA$0.319961
  • nemNEM$0.066040
  • dashDash$120.93
  • neoNEO$11.38
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