RIPPLE’S founders are the latest crypto billionaires.
The price of ripple has increased by 1240 per cent in the last 30 days, from around 25 US cents to $US3.38, surging past bitcoin cash and ethereum to become the second largest cryptocurrency.
This time last year, ripple was sitting at just under 0.7 of a US cent. That’s an increase in value of 51,542 per cent in 12 months.
Ripple’s market capitalisation — the price multiplied by the number of coins in circulation — is now $US130 billion, roughly half that of bitcoin, with ethereum on $US96 billion and bitcoin cash on $US41 billion.
Two weeks ago, ripple’s market cap was just $36 billion.
At one Point in the 1989 Japanese real estate bubble, the Imperial Palace in Japan was said to be worth more than the entire state of California,, things that don't make sense don't last….be careful out there
— Michael Novogratz (@novogratz) January 4, 2018
Mike Novogratz, the billionaire investor who last month revealed he was “pressing the pause button” on plans for a cryptocurrency hedge fund amid uncertain market conditions, has warned 2018 will be a “wild ride”.
“Ripple Labs worth $US225 billion,” he tweeted on Thursday. “Tenth largest company by market cap in the world. Makes [co-founder] Chris Larsen worth $US55 billion tying Mark Zuckerberg as fifth richest man in the world.”
Mr Larsen owns 5.19 billion XRP — the native currency of the ripple network — and a 17 per cent stake in the company he co-founded in 2012, according CNBC, putting his net worth at an estimated $US59.9 billion, ahead of Google founders Larry Page and Sergey Brin and just behind Facebook founder Mark Zuckerberg.
So what exactly is ripple, what makes it different from bitcoin, and what’s behind the surge in interest? Ripple is similar to bitcoin in that both are decentralised ledger systems designed to facilitate transactions across the internet.
But while bitcoin is a decentralised digital currency, ripple is a “decentralised transaction network that also contains a digital currency”, as former employee Nathan Ihara explained on Quora in 2013.
“The bitcoin network tracks the movement of bitcoins. The ripple network can track information of any kind,” he wrote. “As a result, ripple can track account balances of any existing currency.”
That, along with its capacity to rapidly settle cross-border transactions, has made it attractive to traditional banks and financial institutions, with more than 100 adopting the technology so far, including Westpac and UBS.
“Bitcoin and ripple use a different method to reach network consensus,” Mr Ihara adds. “Bitcoin uses proof-of-work (mining). Ripple uses an iterative consensus process. As a result, ripple is faster than bitcoin. It only takes a few seconds to finalise transactions. It’s also more energy efficient.”
As IG analysts wrote in a recent note, ripple effectively positions itself as a “complement” to bitcoin, rather than its rival. “The ripple network is meant to allow the transfer of any form of currency, regardless of whether it is the traditional sort, such as dollars or euros, or the new types such as bitcoin,” IG wrote.
Unlike bitcoins, which are “mined” by computers on the network at a set rate to a fixed 21 million out to the year 2140, ripple is “pre-mined”, with 100 billion units in existence, 20 billion of which were retained by the founders.
“The interest in XRP appears to tie in with its proprietary blockchain that’s focused on financial service companies,” Motley Fool analyst Sean Williams wrote recently. “In particular, ripple’s blockchain could allow for cross-border payments and transactions that occur instantly, rather than waiting days as under the current system.”
In a 2015 report, cryptocurrency researcher Tim Swanson argued banks would embrace “permissioned” ledgers like ripple — which use legal entities to validate transactions on the network — as opposed to bitcoin’s “unpermissioned” ledger which relies on anonymous miners.
“The idea with the distributed ledger system is to say, ‘How can we take the useful parts of bitcoin — or at least the ledger idea — and integrate it with businesses that have legal reputations?’”
But that cosiness with the traditional financial industry also creates suspicion among cryptocurrency diehards — after all, bitcoin’s original purpose was to cut out banks altogether.
Tom Luongo, financial commentator with Newsmax and publisher of the Gold, Goats n’ Guns blog, has speculated that financial institutions are launching a co-ordinated “attack” on the cryptocurrency market, with ripple, disparagingly referred to as “BanksterCoin”, as the weapon.
“Ripple is the stalking horse of the cryptocurrency industry,” he writes. “Its meteoric rise in price coincides with bitcoin’s peak and subsequent meandering.
“The best way to kill a market is to get retail investors buying the peak and selling into it. It’s easy to believe in an irrational pump of bitcoin to $US20,000 and the subsequent rotation out and into ripple, boosting its price and profile, while leaving ‘teh newbz’ hanging at the top.”
Mr Luongo argued the spike to $US20,000 was created by the controversial rollout of bitcoin cash by cryptocurrency exchange Coinbase last month, which led to accusations of insider trading after a suspicious price increase in the bitcoin “fork” prior to the announcement.
“The goal there was to sow confusion and undermine bitcoin cash as an alternative to bitcoin,” he writes. “See, folks, all of this confusion and carnage comes from not having any kind of centralised control. But, hey, there’s this new cool thing called ripple which solves all of that and the price is going bonkers! Trap set.”
Bitcoin Educator Andreas Antonopoulos Gives a Digital Deep Dive on Blockchain Transactions
One of the ways by which the crypto industry can make significant process is through the education of those who make use of crypto and those who simply observe the industry.
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He recently uploaded a video in which he touched the process of manual construction of transactions that have multiple inputs in response to a question posed by a user about whether the process will be done by a blockchain or not. Antonopoulos explained that the process is done by a wallet and not a blockchain.“You can conduct the process with a variety of wallets that allow you to construct transactions. With multiple inputs. Electrum wallets and other web-based wallets are good examples of platforms that give you the liberty to control transactions. Just to clarify, the process is done by the wallets and not by the blockchain,” Antonopoulos said.
He also pointed out that the construction wallet is based on an algorithm and if more than one payment is needed due to small amounts the wallet will construct the transactions with payments. This process, he explained, is called coin selection and helps in the movement of various transactions.
Also, he touched on the concept of change on the blockchain and pointed out that bitcoin transaction outputs have two states in which the exist which are spent or unspent and that there is no concept of a half-spent transaction.
While this was very helpful for users, some controversy was caused when Antonopoulospointed out that the scalability problem that bitcoin struggles with will always exist and that solving one issue will inevitably bring up more.
“..and you can’t, in the beginning, solves the problem for the end there is no end and also if you prematurely optimize if you try to solve scale problems for a scale that doesn’t yet exist you shift the problem somewhere else in the case of cryptocurrencies,” he said.
The Need for an Education
While Antonopoulos might have caused some controversy, it cannot be denied that his efforts to educate the public on blockchain and crypto are highly needed, especially seeing as many of the problems faced by users can put down to a lack of education about how blockchain works.
An example of this can be seen in security as a research piece that was published recently pointed out that over 700 crypto wallets were broken into by the researchers merely guessing the passphrases which were usually weak and repetitive phrases.
In such a case, education about how wallets, blockchain, and crypto work could go a long way to prevent such issues, ensuring Industries safer for all.
Russian Opposition Leader Raises $3 Million in Bitcoin Donations
Bitcoin has become a significant funding source for one of Russia’s leading political dissidents.
Alexei Navalny, a politician believed by many to be President Vladimir Putin’s main opponent, has attracted more than 591 BTC in donations over the last three years, worth about $3 million at current prices, public blockchain data shows.
The donations became a flashpoint this week when a pro-Putin television network questioned their timing.
Navalny’s investigative center, the Anti-Corruption Foundation (FBK), regularly publishes exposés of government officials, including prime minister Dimitri Medvedev and attorney general Yuri Chaika.
On Monday, an anonymous Telegram channel, “FBK Staffer’s Confession,” noted that the Navalny organization’s wallet received several large donations a few days before FBK published one such investigation, insinuating it was a paid hit piece. The claim was covered in Russian media, including the pro-Putin Tsargrad TV.
When contacted by Russian news publication Znak, FBK’s chief of staff Leonid Volkov denied any connection between the transactions and its investigations, saying the anonymous blogger “dragged the non-existent facts together in by the head and shoulders.”
“You can say that each time Encke’s Comet approaches the Earth it coincides with a big war: 1914 (First World War), 1941 (World War II) and 2014 (War on Eastern Ukraine). But its rotation period is three years, and it approached the Earth many times when there were no big wars.”
The Navalny wallet (3QzYvaRFY6bakFBW4YBRrzmwzTnfZcaA6E, listed on the donations page of his website) received its first bitcoin in December 2016 and since then has seen more than 2,000 transactions, including withdrawals, according to blockchain data.
Most transactions were worth from a fraction of a bitcoin to several bitcoins. From time to time, larger transactions occurred, bringing in up to 20 BTC at once.
Yet Navalny’s political movement, which also accepts donations via bank transfers and PayPal, is not the only dissenting voice in Russia to take cryptocurrency.
Investigative outlets including Zona.Media and The Insider, as well as internet freedom movement Roskomsvoboda, accept donations in bitcoin or ether. However, their wallets have accumulated only small amounts of crypto, no more than 2 BTC each.
Bitfury, Swiss Investment Firm Launch Regulated Bitcoin Mining Fund
Blockchain technology firm Bitfury and Switzerland-based investment firm Final Frontier have jointly launched a regulated bitcoin mining fund.
The fund is targeted at institutional and professional investors to give them “convenient access” to bitcoin mining, Bitfury announced in a blog post Wednesday.
Traditionally, there have been “technological, logistical, financial and execution risk challenges” with access to bitcoin mining, the firm said, adding that the fund aims to address those challenges with an offering that has now been authorized by a European financial watchdog. Which particular regulator was not specified, however.
The fund will invest in turnkey assets consisting of mining sites with some of the “lowest electricity and operating costs globally,” scouted and operated by Bitfury, which specializes in manufacturing cryptocurrency mining infrastructure and also mines itself.
Claiming that the fund has been launched at an “advantageous” time for investors, Final Frontier co-founder, Imraan Moola, said:
“With the bitcoin price down significantly from its all-time high, yet institutional interest growing every day, now may be an opportune time to consider investing in bitcoin mining.”
Bitfury’s executive vice-chairman George Kikvadze said that the fund will help investors “strengthen” their portfolios and bring bitcoin closer to mainstream adoption.
Earlier this year, Bitfury partnered with South Korean R&D firm Commons Foundation to jointly launch a network of bitcoin mining operations in Paraguay.
Bitfury is also reportedly considering an initial public offering (IPO) in Amsterdam, London or Hong Kong, possibly to be held this year. The firm raised $80 million in November, in a round led by venture capital firm Korelya Capital, with Mike Novogratz’s Galaxy Digital, Macquarie Capital and Dentsu Inc. also participating.