Sunday, May 5, 2013

Ripple is now a Tsunami!

Just like that, Ripple's market cap now exceeds that of Bitcoin. There are a lot of people asking just what the heck is going on, and of course, trying to figure out if this is just another digital currency bubble.

Taking into consideration the total number of Ripples (XRP), that is, 100 billion, and the current exchange rate of approximately 70 XRP/USD, the XRP market cap is $1.43 billion USD. Bitcoin's market cap is currently $1.30 billion USD.

Clearly the XRP exchange rate has been influenced by the limited supply of XRP. The question is, how many are actually "floating" and how many have been locked away by OpenCoin and the founders?


We do know that the founders have retained 20 billion XRP, and that OpenCoin controls 80 billion XRP. Of that 80 billion, 50 billion are being "given away," though how that is happening is a bit of an unknown. It's likely that giveaways like the one we saw on the bitcointalk.org forum are the exception and not the rule. OpenCoin is probably paying developers in large lots of XRP to help build Ripple's infrastructure and applications.

Six days ago, someone put together a spreadsheet that lists all non-zero Ripple accounts and their XRP holdings. From this list, we can make some educated guesses:

There are 99.25 billion XRP in the top 55 accounts, with the smallest one holding 40 million XRP. These are likely OpenCoin holdings or those of major investors. We can safely assume that none of these coins are in circulation.

There are another 17 accounts with exactly 10 million XRP that, again, are not likely in circulation. That brings the total number of "institutionally held" XRP to 99.42 billion.

The total number of XRP that are actually being bought and sold right now is therefore in the 500 million range. At 70 XRP to the USD, they would be worth just over $7 million USD, a realistic estimate of how much fiat and BTC has been deposited into Ripple.

Account number nine on the spreadsheet is of great interest, as it appears as one of the nine billion XRP accounts, but one that has been drawn down by 1.421 billion XRP. What is this account being used for? Perhaps for actual giveaways, or for selling Ripples to re-sellers such as BitStamp or xrptrader.com.

Sources tell me that, in the same vein as what has been happening with Bitcoin, Chinese investors have shown great interest in Ripple, and are responsible for a non-trivial fraction of the recent rise in XRP valuation.

So what is Ripple actually worth? As a protocol, it has Bitcoin beat hands down. Remember that most merchants do not accept Bitcoin directly, instead, they use services like BitPay to instantly convert Bitcoins to fiat. A good portion of Bitcoin's utility is as a protocol, not as a store of value. We will probably see much of Bitcoin's protocol-driven business move into Ripple as additional gateways, like the soon-to-be open Kraken, come online. If Ripple's "Federation Protocol" gains traction, we could very easily see a market cap in excess of $10 billion USD within a year.

Remember that Ripple's key investors have connections to PayPal and Dwolla, and will want to bring them on as Ripple Gateways. Such a move would boost Ripple's valuation well into the stratosphere, leaving Bitcoin behind as a beta-version afterthought.

Expect to see some interesting discussion, debate, and hopefully some big revelations at this year's Ripple... err... Bitcoin Conference in San Jose in two weeks. With the drama surrounding CoinBase and MtGox, and the explosion of interest in Ripple, the timing couldn't be better.

52 comments:

  1. A Tsunami? Of shameless hype is what it is. All the Ripples are already jn private hands, to be dolled out like candy to the peasants? "China is interested". This is pure nonsense, bluster and fantasy speculation. The killer here is that investiors from PayPal are touching Ripple in any way. This is the Complete French Kiss of Death.

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    1. Then is PayPal the "French Kiss of Death" for Bitcoin as well? http://blogs.wsj.com/digits/2013/04/30/could-paypal-be-on-horizon-for-bitcoin/

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    2. theres a difference between CONTROLLING a currency and simply USING it

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    3. Remember, there's XRP and then there's Bitcoin. You can still use the Ripple system while holding not much more than $1 worth of XRP.

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    4. Correction: "then there's Ripple."

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    5. How is this different from counterfiting USD? You create XRP out of thin air, peg it to the US dollar, give them away to friends and family, and magically you have USD?? OMG, the secret service is just watching and ready to pull the plug on this. The idea is sound, but not the way it's being disseminated. The little guy has no business creating money from nothing Why is everyone so naive to this?

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    6. Because as we have all seen, central government is so much better at producing currency out of thin air. (Sarcasm greatly implied)

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    7. >"How is this different from counterfiting USD?"

      I'm strongly against Ripple unless they publish the source code, and even after that I will consider Bitcoin superior. But you, sir. Have no idea what you're talking about.

      You're messing XRPs and other IOUs inside the Ripple network together.
      XRP in the Ripple network is an equivalent of BTC in Bitcoin network. Other IOUs depends on which issuer do you trust.
      Imagine a World economy as one large ripple network, and governments as entities issuing and backing their currency units created inside this network by something (gold, basket of other currencies, army with guns...). If you as a user of this system decide to trust some entity for whatever reason, you can trade with their IOUs. If some entity decide to apply fractional reserve banking, there should be regulators with combination of other market participants who will uncover this. In theory, this entity will loose trust of their users, and value of certain IOUs will decrease or fall to 0.
      This is the theory. But I think it will not work in practice. Are you sure that PayPal is backing all their users balances with actual gov. issued units? I'm not. Are you sure that Mt.Gox is holding all the BTC and USD in a vault? I'm not.

      Conclusion: Ripple is system that can allow anyone to easily became the PayPal alternative with an ability to interact with others who decide to do the same.

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  2. You got paid by OpenCoin for this article?

    Ripple is a rip-off alternative. Centralized, for-profit mess for them and a few investors and thus the opposite of what Bitcoiners want in a perfect crypto-currency.

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    1. Bitcoin will carry on as a great store of value. Ripple can move fiat currency; that's its strength, and not a feature that Bitcoin can compete with.

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    2. Top 55 accounts have 100 Billion XRP...great way to hide a pyramid scheme. The 50 billion they are giving away is smoke and mirrors. Oh but it's an IOU system - that's just a disguise.

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    3. It is absolutely hilarious how many Bitcoin users are calling Ripple a pyramid or a Ponzi scheme, when Bitcoin was accused of exactly the same thing, over, and over, and over again, only to prove itself otherwise. Maybe you're wrong?

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    4. "Ripple can move fiat currency; that's its strength," No, Ripple cannot move fiat currency. It moves fiat debts. Moving the actual asset (the fiat) still requires all the normal banking systems, payment processors, etc.

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    5. Thanks for the clarification. I thought Ripple was a system of donkeys and hired labour moving bags of cash.

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    6. https://bitcointalk.org/index.php?topic=174854.msg2035411#msg2035411 http://bitslog.wordpress.com/2013/04/17/the-well-deserved-fortune-of-satoshi-nakamoto/ http://vlntry.com/2013/05/04/bitcoin-creates-a-fortune-out-of-nothing-for-one-man/

      "The person(s), who Sergio assumes is the one accredited with inventing Bitcoin, has netted 1,814,400 BTC from mining, 1,148,800 of which has never been spent [1]. In today’s exchange rate, that’s about $100 million US dollars. Not bad for inventing your own fortune."

      The Bitcoin community should not delude itself into believing BTC cannot be centrally controlled and that Bitcoin itself has not enriched its founder.

      Ripple's price is based on its value as a currency. I have read interpretations of the Ripple claiming it is a "postage stamp." This is simply not true. In order for the Ripple protocol to work, Ripple must carry value beyond that of a simple "postage stamp" - it must carry the value of the entire transaction. The brilliance of Ripple is in the robust protocol which allows Ripple to change hands and interfaces with the world's currencies via the built in exchange.

      Remember why humans use currency in the first place. It is much easier for me to carry a coin currency in my pocket than three goats and a cow. In today's technological era, currency must evolve to facilitate transactions. A currency which can be transmitted semi-anonymously with no fees instantaneously is much more valuable than a currency which costs 2% a transaction and takes hours or days to change hands in full view of the prying eyes of our neighbors.

      A robust, more stable, scalable currency which speed is not limited by a slowly synchronizing block chain as the currency scales, which is decentralized and stabilized by an authority holding much of that currency, which does not suffer from the 51% processing block chain forking fatal flaw, which possesses a built in exchange and HTTP-like protocol for moving any currency that adds to stability, which provides an incentive system discouraging DDOS-like transactions, which is near instantaneous and scalable holds great value. Ripple is actually more valuable than bitcoin as a currency.

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    7. The value that Ripples offers, instantaneous transactions is also likely its Achilles heel. If there is a flaw, glitch, bug, imperfection that someone can take advantage of then that advantage will be taken instantaneously, and the collapse of the system will be instantaneous. How does a .0001% fee stop this?

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    8. Anonymous:
      >>"Ripple can move fiat currency; that's its strength,"
      >>>>No, Ripple cannot move fiat currency. It moves fiat debts. Moving the actual asset (the fiat) still requires all the normal banking systems, payment processors, etc.

      I think there is little difference between how Ripple moves currency and how "normal banking systems, payment processors" move money -- they are all about shuffling around debt, aren't they? Or how does the normal banking system differ from this (when it comes to transfers)?

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    9. >"No, Ripple cannot move fiat currency. It moves fiat debts."

      Fiat currency usually is a debt. Where's the difference?

      "Yo dawg, I heard you like debt, so I issued a debt of a debt..." ;)

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  3. No, that's capitalism.

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  4. Please explain the anonymity or privacy of Ripple and I'd like to know how what insures Ripple's incorruptibility? I use Bitcoin for these reasons. If Ripple is as efficient or better in these areas I will gladly switch. Please do not tell why I am wrong or some other non-answer just what I asked. Thanks, Anon.

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    1. You are corrrect. Rather wait for hash dollar

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  5. How the hell is this fair for the rest of us when the founders hold so much ripples? And crumbs are for the us peasants right? Fcuk ripple.

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  6. Bitcoin continues to be developed day by day in true FOSS fashion, Ripple has the same going for it. So, what is a big difference between these two?

    Comparing it to communications, Bitcoin can be compared to RetroShare, while Ripple is comparable to Diaspora. Both have their strengths and weaknesses. Ripple seems more user friendly and may be able to attract better mainstream support. Bitcoin, however, clearly wins from the perspective of freedom, since it is completely decentralized, yet stores value on the computer of its owner.

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  7. The idea behind ripple is a great one. But as long as the XRP concept is flawed* and the server part is not opensource I can't take it seriously.

    *Opencoin keeps 80% of the XRP and the rest will be distributed by "give aways". They openly admit that they hope that the XRP they keep will gain value, that is the Bussiness Modell of Opencoin Inc.

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  8. ...none of them knew they were robots.

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  9. Where can I sell XPR for 70 per $1 USD?

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    1. Tried to deposit them at bitstamp, they said they don't allow ripple deposits (and that they only allow USD/BTC in wallet)...I'm at a bit of a loss where these price stats are coming from?

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    2. Within your Ripple account, click "Advanced," then click "Trading." Select USD/XRP. Click "change issuer" for USD and enter rvYAfWj5gh67oV6fW32ZzP3Aw4Eubs59B (this is BitStamp's address. Then click "Order Book" at the bottom. Now you're looking at Ripple's internal exchange for BitStamp USD IOUs and XRP.

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    3. Thanks, so I did a trade for USD and now ripple says I have $472 USD....how do I get my dollars out (I don't see any USD in my bistamp balance)?

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    4. Bump? This is more information than I found on my own, but it looks like we need follow-up.

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    5. Login to your BitStamp account, click "deposit," click "Ripple," and withdraw the USD in your Ripple account to the Ripple address shown.

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    6. Thanks. I also figured it out. I am stuck on the idea that you can take it "out" which is possible with bitcoin but obviously not with Ripple.

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  10. Hey, I wanna start my own currency too..

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    1. I only want my landlord, cell phone company, cable company, grocery store and Delta Airline to accept it.
      I wanna go to Japan, you see..

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    2. Inside Ripple, you can. Here's an example:
      https://bitcointalk.org/index.php?topic=147155.0

      Make sure you can honor the IOUs you create. I think I'm still in possession of some molecular's favours. Now I can go and ask him to do me a favour :)

      Also, remember you need some XRPs to be able to trasact in the network. If you didn't received any, go to bitcoin talk givaway thread. If you received them already, but sold. You have to buy some.

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  11. this article Miscalculated... top 55 account own only about 91billion..

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  12. Obviously, investors saw what happened to Bitcoin (hype). They are trying to re-create that with Ripple, so they can cash out. This makes Ripple unstable.

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  13. You are not examining Ripple for what it is. You are looking at random associations around Ripple and making judgements based on relations which have no bearing on the Universal truths governing the Ripple protocol and advantages of the Ripple protocol and currency over descendent currencies and protocols.

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    1. OK, advantages: go

      Completely centralized
      Fast (instant) transactions

      I'm being fair and trying not to say anything negative. That's all I could come up with.

      What are these 'Universal Truths' as you see them?

      It seems to me that Ripple corporation can come along and erase all of my ripples any time they want. "They wouldn't do that" -- yeah, I'm sure of that. Why would I ever come back, if my ripples were gone instantly all at once?

      It's important to me that I can take my bitcoins out of the exchange (without converting them to some unrelated unit of value/exchange). Without that feature, IMHO we're talking about just a more open version of Paypal.

      Also, what do you mean by 'descendant currencies and protocols'?

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  14. OpenCoin (Ripple) is, simple said, a new exchange site.

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  15. Replies
    1. http://www.youtube.com/watch?v=0UKC7iaBKvs

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  16. So, as a brand newbie, and a layman to all things financial, I fail to see the controversy for you sophisticates. So long as I don't park my savings in ripple and so long as its exchange rate doesn't collapse during the 15 - 30 minutes I am using it as a vehicle and intermediary between one product/location and another product/location, tell me again why I should avoid its likety-split speed and efficiency just because someone I'll never meet is parked on a bunch of them hoping for Ripple Vesuvius to erupt?

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  17. So what other exchanges like bitstamp or litetree take the ripple?

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  18. Who are these investors behind ripple? I've heard it is large banks. If that is true, that there tells you everything you need to know. Ripples is designed to be a bitcoin killer.

    Banksters behind opencoin will replace bitcoins with IOU's for bitcoins. Just like they replaced gold with paper. They have named it opencoin to make it sound open and decentralised, just like they named the federal reserve bank to make it sound like a part of the US govt. This is a con(fidence) trick.

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  19. > Ripple is now a Tsunami!

    No, it's not.

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  20. opencoin site is much better for answer of this Q

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  21. anything that advocates government control & bank manipulation in any fashion with a digital currency is not worth the investment. If ripples are meant with these two factors as key drivers in the currency then they can keep it. Bitcoin/Litecoin are better suited for people who love their freedom and enjoy some anonymity when big brother and big sister are constantly trying to take these freedoms away. Ripple may have a good head start but savvy investors who appreciate the unique quality of bitcoin as a currency will stay away and not even blink.

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  22. The market cap of ripple exceeds bitcoin? Imo that is a very ignorant statement. Gowest you know better then that. There's not even close to 100 billion xpr in the market right now. Probably closer to 100 million so market cap is what... 1.4 million not billion. Like wow!!! How many xpr where you given to write this article there chief? Credibility out the window you sell out.

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  23. A new project to leverage Ripple: http://igg.me/at/ripplebank/x/3554722

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  24. If OpenCoin released those 99 billion XRP to the market, XRP would be worth nothing; so it is not accurate to calculate the market cap of XRP based on those. If OpenCoin tried to sell those 99 billion, it would not get today's market price for them.

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  25. Also, people need to realize that authorities could easily impose "sanctions" via trusted ripple servers. Ripple's "decentralized" model is dependent on lists of trusted nodes (as an alternative to bitcoin's proof-of-work). The relatively common list of trusted nodes could be used by the US government to manipulate/limit transactions in Ripple, or even confiscate someone's ripples. These trusted nodes are preconfigured into the Ripple client.

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