Wouldn’t it be nice to wake up every day and see your money doubled, and then again, and again? Welcome to Ripple, the latest to go parabolic in a musical chair that started with Monero some months ago and seems to be going around digital currencies.
Ripple seemingly did not want to be left out and so far their show is the most spectacular. Up 10x in just two weeks, rising in market cap from insignificant to an incredible near $13 billion at the time of writing, almost half of bitcoin’s market cap.
It has surpassed ethereum, the cool new kid, and it’s now sort of saying to the whole space, look at me, look at me, I’m the story now. Sure, I’ll oblige.
Ripple goes parabolic – image from cryptowatch
This parabolic rise began shortly after April 26th when Ripple announced in a press release ten banks had joined following a previous press release on March the 1st that stated “forty seven Japanese banks move towards commercial phase using ripple.”
Interestingly, Japan apparently has more than 198 banks, although only around 35 are listed on Wikipedia. Anyway, it sounds like great news for the Japanese so they might be driving this price rise, but, according to coinmarketcap, only around $2 million out of some $300 million in trading volume comes from Japan.
Moreover, and somewhat puzzlingly, ripple is trading at half its current price in Japan, with one ripple going for $0.17 in JPY while other currencies trade it for around $0.33 as of writing. So, Japan is clearly not the driver. Instead, it appears Poloniex and South Korea are leading.
There isn’t much other news from what I can see, but an historical look at ripple’s market cap appears interesting as can be seen in the image below dating all the way back to November 2013.
Ripple’s historic market cap – source coinmarketcap
At that time, ripples (XRP) were just given away on bitcointalk with 50,000 given to anyone with an account. According to Wikipedia, 20% of all ripples amounting to 20 billion were retained by the founders with Jed McCaleb holding some 10 billion.
Another 60 billion, out of a total of 100 billion, is held by Ripple, a centralized company registered with the Fincen as a Money Transmitting Business which runs the vast majority of ripple’s consensus network. [Editor’s update: A representative for Ripple has reached out to clarify that Ripple is decentralized, pointing to further details here. ]
McCaleb and others in the Ripple Labs had a dispute, so he left to fund a ripple clone called stellar and threatened to sell his 10 billion ripples at a market rate. They are now in a legal battle so that 10 billion has not yet been sold. [Editor’s update: McCaleb has since reached a settlement with Ripple, claiming the company’s claims as “baseless”].
Moreover, a flaw was found in stellar’s consensus system in 2014, which is similar to ripple’s with stellar’s chief scientist concluding that the stellar system is unlikely to be safe “when operating with “more than one validating node,” [because] when consensus is not reached, a ledger fork occurs with parts of the network disagreeing over accepted transactions.”
Ripple’s chief cryptographer concluded that stellar (created by ripple’s founder) had incorrectly implemented the consensus system and that ” there is no threat to the continued operation of the Ripple network.”
Ripple’s historic market cap – source coinmarketcap
Now, if we look back at the chart above, ripple had a sharp price increase and sharp fall in November 2013, another sharp increase and fall in November 2014 and now another sharp increase.
The recent price rise is an almost vertical line, adding $6 billion in just one day to its market cap, but, it hardly has any community, or really any projects, or ecosystem, except for the Japanese banks which do not seem to be giving it much trading volume.
So, dare I say pump and dump? No, but I would strongly caution CCN readers because historically ripple does not hold any price appreciation as the currency is very centralized and the super vast majority of its supply is held by only very few, plus most do not consider it interesting and its intermediaries system is a bit of a hassle.
The market has already considered ripple many times and it has rejected it. There appears to be nothing different this time, so it’s not clear why it wouldn’t be rejected again with the event probably being just a 5 minutes of fame before going back into irrelevance like monero, dash and now maybe litecoin too.
