Similar to Bitcoin, Ripple has been seeing an astronomical rise in price over the past couple weeks. In fact, only a few days ago its price rose 70% in just 24 hours. Many traders are anticipating an announcement by the Ripple team which would ultimately lock up millions in XRP to instill confidence in the project.
The announcement is speculated to come during Coindesk’s Consensus meetup in New York, which will be held in in 5 days on May 21st. While there are many rumors circulating how much and and for how long the XRP will be locked up for, JoelKatz – a Ripple Employee – weighed in on the topic on the XRP forums. He said:
Locking up too little or for too short means we get less predictability. Too little gives effectively no predictability at all. The only real downside to locking up too much XRP is if the price is getting too high and we want to use the opportunity to increase the supply but can’t. First, that’s a good problem to have. Second, in that case, we can still increase the supply at a predictable rate, and I don’t see it being a problem if the price gets “too high”. We’re not looking to make money by selling XRP at temporary peaks — that’s never been our strategy.
As Katz explained, the reason for locking up Ripple is to create more predictability in the market, furthermore, if the XRP team locks up a substantial amount of coins that means a feeling of security and trust for traders, which should translate into more positive momentum in the market. It is not surprising that Ripple’s price has increased exponentially amid these rumors and the general trend where altcoins are receiving more and more investments.
According to coinmarketcap, Ripple’s market cap is at a whopping $12 billion. That is more than 40% of Bitcoin’s market cap which is at $28.6 billion. However, keep in mind that compared to Bitcoin which has 16.3 million coins in circulation, Ripple has over 38 billion coins in circulation. So, even though a single Ripple costs 32 cents, the sheer amount of coins in circulation inflates the market cap to a massive number.
Ripple is different in the sense that it appeals to more traditional financial institutions, its protocol has been adopted by a variety of banks in different countries. Unlike Bitcoin, Ripple doesn’t use the traditional proof of work algorithm, instead it uses an iterative consensus process, which is unique to Ripple.
Furthermore, Ripple acts as a decentralized currency exchange, so if someone wants to sell their XRP, while they can use traditional means like an exchange, they can also use the Ripple network to exchange the currency. Ripple is also non mineable, and the coins are distributed by a third party. This creates somewhat of a misconception that Ripple is a centralized permissioned ledger, however that is not true. While Ripple has its differences from Bitcoin, the ledger is fully public and can be used by anybody.
Both Bitcoin and Ripple have their places in the cryptocurrency ecosystem, but it seems that the appeal that Ripple has towards traditional financial institutions is a big advantage it has over Bitcoin. Whether this recent price rise is a bubble in the making is up for debate, one thing is for certain though, Ripple is not going away anytime soon, especially after the team locks up millions to instill confidence for investors and their clients.
Dislaimer: This is not trading advice, this article is for educational purposes only. If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
You may be interested
Who’s Left, Joined and Almost Joined Coinbase Since Its $300 Million RaiseBrian Evans - Jan 18, 2019
A roundup of notable recent departures and hirings at Coinbase, one of the most coveted places to work in the crypto industry.
Coingate Integrates Lightning Network on Litecoin to Boost Crypto PaymentsBrian Evans - Jan 18, 2019
Cryptocurrency payments platform Coingate has begun its Lightning Network trial using Litecoin. According to marketing manager Veronika Mishura, the company does up to 10% of its monthly volume…
Thai Stock Exchange Plans to Launch a Crypto Trading PlatformBrian Evans - Jan 18, 2019
The Stock Exchange of Thailand is looking to capitalize on investor interest in cryptos by offering a new digital assets exchange.