RIPPLE COIN REVIEW

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Litecoin. June'18 overview
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Bitcoin Cash. June 2018 overview
Are cryptocurrency indices a new crypto market trend?
EOS. End of May'18 overview
Ethereum. May 2018 overview

Here on Cryptoindex blog, we would like to tell you more each coin selected by our powerful Cryptoindex AI-based algorithm. We’ll be posting one article about one coin from the portfolio with #cix100coinreview hashtag.

Today we would like to review Ripple. Further Perspectives.

Ripple (XPR) is a cryptocurrency which was launched in 2012 and focused on the banking sector of the economy. Ripple’s aim was to secure, instantly and nearly free global financial transactions of any size with no chargebacks.The network is decentralized and can operate without the participation of Ripple Labs. At the end of 2017 Ripple was amongst the top ten cryptocurrencies in terms of market capitalization, together with Bitcoin, Ethereum. In fact, Ripple has the potential to replace Visa and Mastercard, but this won’t’ happen. Let's see why.

How did it all start and how does it work?

The predecessor of the Ripple payment protocol, called ‘Ripplepay’, was first developed in 2004 by Ryan Fugger in Vancouver. Fugger came up with this idea after working on a local exchange trading system. His intention was to allow individuals and communities to create their own money. The first implementation of this system, RipplePay.com, was launched in 2005 as a financial service to provide secure transfer options for members of the online community via the Internet.

This led to the idea of a new system developed by Jed McCaleb of the eDonkey network, which was designed and built by Arthur Britto and David Schwartz. In May 2011, they started developing an electronic payment system in which transactions were confirmed by network participants, rather than the mining process used by bitcoin.The updated version of the Ripple system differed from the existing economic infrastructure bit by bit by the lack of dependence on online exchange services. In addition, Ripple uses less electricity than bitcoin and transactions are much faster.

Integration with the banking market

Since 2013, Ripple has taken a clear course to work with the banking sector. The protocol accepts all new financial institutions to "offer an alternative remittance" for consumers. The first bank which tried to use Ripple was Fidor Bank in Munich. In October 2013, rumors appeared in the press about Ripple's cooperation with ZipZap, which was later called a threat to Western Union.

In 2014, Ripple worked with several projects, including an application for the iPhone which allowed users to make payments through the phone in a decentralized manner, without contacting the bank. Unfortunately, this project was not successful and was closed. Then, in July of the same year, Ripple Labs proposed Codius, a project to develop a new smart contract system, without reference to specific programming languages.

On the 5th of May 2015, FINCEN fined Ripple Labs and XRP II for $700,000 for violating the Bank Secrecy Act, based on the addition to the Financial Crimes Enforcement Network of 2013. The management at Ripple tried to rectify the situation and entered into an agreement allowing XRP and Ripple Trade to operate only through registered financial service institutions (MSBs). The improvement did not change the protocol itself but added AML transaction monitoring in the network and improved transaction analysis.

Confidentiality

Although transactional information is publicly available, information about payments is not. Thus, it is difficult to link transaction information to a particular user or corporation.

Ripple - is the "eternal" ICO?

Recently, many users stated that Ripple is an "eternal" ICO. The claim was filed in the same form as for other ICO startups. Ripple was accused of offering unregistered securities to retail investors.

Investor Ryan Coffey who states he is acting on behalf of all buyers of Ripple tokens claims that Ripple Labs and its head Brad Garlinghouse sold him unregistered XRP tokens resulting in losses of over 32% of his initial investment.

Ripple press - secretary Tom Channik commented on the trial in an e-mail:

“We found out about the lawsuit filed by the judge and published on Twitter did not receive an official summons to the court. As in the case of any other civil action, we will have an opportunity to assess the validity of the charges or lack thereof. Only the Securities and Exchange Commission (SEC) can decide whether XRP is a security token or not. We continue to believe that XRP should not be classified as a security token”.

For his part, the plaintiff states:

“XRP is a security token. The respondents themselves admitted that investors in XRP could safely rely on profit and details of this more than once publicly advertised the positive price dynamics of the token”.

According to the statement of claim, in January Coffey bought 650 XRP tokens at a price of approximately $2.60 per coin, spending $1690, and a few weeks later he sold at a loss of $551.

The SEC’s statement inJuly17 forced a discussion about whether the Ripple token XRP and its more successful competitor Ethereum could be a security token.
The former chairman of the Commission for Futures Trading, Gary Jensler, said in April that XRP and the Ethereum met the criteria for securities.

This event caused a public outcry and attracted the attention of the SEC and other legislative bodies. No answer was given due to the lack of regulation still within these financial markets.

What to expect in the future? Growth or fall?

A huge rise in theсryptocurrency market in December 2017 helped Ripple to gain a foothold at $0.5 and hold these positions for quite a long time. As for the platform itself its future is not certain.

Rippleis a good competitor for VISA, Mastercard, and other payment systems, however, it lacks widespread use, ease of payment execution and adaptation to the average user.

Another, severe "stumbling block," is the fact that more than 20% of the total emission of tokens in 100 billion XPR is in the hands of developers, which has repeatedly been discussed in the community.

Ripple has the capacity the freeze funds. The Ripple gateways protocol freezes those trading assets to which they granted access. For example, the Bitstamp exchange gateway can freeze the USD of a user who has configured the credibility of the gateway. This opportunity was introduced at the request of regulators in response to a reversal of focus on the banking sector.

The freezing of funds was applied to one of the former founders when he was trying to sell a large amount of XRP in a single transaction. Ripple intervened and utilised its ‘Balance Freeze’ feature. By doing so it enabled the company to stop the movement of XRP. In this case, since XRP functions without a gateway, no one can freeze XRP, but it is possible to freeze those assets to which XRP is exchanged.

Conclusion

The Ripple system has a lot of obvious disadvantages and at the same time pluses. The company has good prospects for growing, due to its bias towards the banking sector. The position of the Ripple Labs management goes between creating competition for such giants as Visa and Mastercard, but at the same time, periodically in the media, there are references to that Ripple testing as a payment system.

But at the same time ,ordinary users are confused by the fact that Ripple is inherently completely centralized. For example, Ripple has the capacity the freeze funds.. The Ripple gateways protocol freezes those trading assets to which they granted access. For example, the Bitstamp exchange gateway can freeze the USD of a user who has configured the credibility of the gateway. This opportunity was introduced at the request of regulators in response to a reversal of focus on the banking sector.

The freezing of funds was applied to one of the former founders when he was trying to sell a large amount of XRP in a single transaction. Ripple intervened and utilised its ‘Balance Freeze’ feature. By doing so it enabled the company to stop the movement of XRP. In this case, since XRP functions without a gateway, no one can freeze XRP, but it is possible to freeze those assets to which XRP is exchanged.