XRP: The Cryptocurrency to Avoid

Expiration of David Schwartz’s Patent Theory

• Patent Expiration: August 25, 2008 (US Patent 5025369A).
  David Schwartz’s patented theory described mechanisms foundational to cryptocurrency development. However, he lacked the resources or initiative to implement it. Just two months after the patent’s expiration, Satoshi Nakamoto published the Bitcoin white paper on October 31, 2008.

Bitcoin’s Timeline

1. White Paper Release: October 31, 2008—detailing a decentralized, peer-to-peer electronic cash system.
2. Launch: January 2009—Bitcoin software was released as open-source code, marking its official debut.

It is widely theorized that Nakamoto utilized Schwartz’s expired patent concepts to craft Bitcoin. This underscores the foresight of Bitcoin’s creator, who transformed theoretical constructs into a fully operational system. Bitcoin’s decentralized design, transparent ledger, and secure protocols cement its position as the gold standard of cryptocurrency.

XRP’s Questionable Claims and Market Position

Ethereum vs. Bitcoin: The Market Leaders

The cryptocurrency industry is dominated by Ethereum in the regulated space and Bitcoin in the deregulated realm.

• Ethereum: Known for its smart contracts, decentralized applications (DApps), and institutional adoption.
• Bitcoin: A fully decentralized, censorship-resistant asset trusted by individuals and institutions seeking a deregulated alternative.

Ripple’s XRP, by comparison, struggles to establish a clear identity. It lacks Ethereum’s versatility and Bitcoin’s tested security. The visual below highlights Ethereum’s dominance in regulated crypto markets and Bitcoin’s leadership in deregulated systems:

Ripple and ISO20022: The Reality Behind the Hype

Ripple claims a pivotal role in the ISO20022 financial messaging system, but the facts paint a different picture:

• Claim: Ripple’s partnerships with entities like Wells Fargo will help replace SWIFT with a blockchain-based system.
  • Ripple’s Wells Fargo Partnership Claim.
• Reality: ISO20022 is simply an updated messaging format—comparable to zipping files for better efficiency.
  • ISO20022 enables multiple transaction queues but operates independently of blockchain or XRP.

Ripple markets its involvement as crucial, yet Swift can implement ISO20022 without any blockchain integration. As a result, Ripple’s XRP token is not required for ISO20022 functionality, contradicting Ripple’s bold claims.

Ripple’s Dubious CBDC Narrative

Ripple promotes its platform as a solution for Central Bank Digital Currencies (CBDCs):

• Claim: Ripple offers tools for minting, managing, and destroying CBDCs (Ripple CBDC Platform).
• Contradiction: CBDCs are fundamentally centralized assets, as clarified by JPMorgan:
  

  “CBDCs are issued by centralized authorities, unlike decentralized cryptocurrencies like Bitcoin.” (JPMorgan).

Ripple’s strategy is to present itself as indispensable, regardless of whether the future of finance is centralized or decentralized. However, closer scrutiny reveals that Ripple’s participation is neither necessary nor unique.

Ripple’s Legal Troubles: SEC vs. Ripple

SEC’s Updated Appellate Brief (2023)

• Core Issue: The SEC argues that Ripple violated securities laws by selling XRP tokens as unregistered securities.
• Updated Arguments: Ripple’s institutional sales violated regulations, while secondary market transactions—though deemed non-securities—remain contentious. (SEC Brief).

Judicial Disagreements

Lower court rulings have left judges divided:

• Institutional Sales: Judges agreed with the SEC that Ripple marketed XRP as an investment.
• Secondary Sales: Controversy arises over whether these transactions were “investment contracts.”

Ripple’s inconsistent marketing of XRP has created confusion, leading to judicial disagreements.

Supreme Court Escalation Possibility

• Potential Appeal: If the appellate court rules in favor of the SEC, Ripple CEO Brad Garlinghouse may escalate the case to the Supreme Court.
• Significance: The case could set a precedent on whether cryptocurrencies are classified as securities, influencing the industry’s regulatory landscape.

Ripple’s Deceptive Marketing Tactics

Ripple’s marketing strategy relies on overstating its role in global financial infrastructure:

1. ISO20022: Ripple is not critical to its success; the messaging update functions without XRP.
2. CBDCs: Ripple’s role is redundant, as centralized banks can implement CBDCs independently.
3. Market Misrepresentation: Ethereum and Bitcoin have far stronger footholds in regulated and deregulated markets, respectively.

Ripple portrays itself as indispensable in all possible futures—regulated or decentralized—but evidence suggests it is merely a participant, not a leader.

Conclusion

Ripple’s XRP is not the revolutionary cryptocurrency it claims to be. Whether the future of finance leans towards regulation (favoring Ethereum) or decentralization (favoring Bitcoin), XRP’s role remains insignificant. ISO20022 operates without XRP, and Ripple’s CBDC ambitions are overstated.

For a deeper analysis, read this Forbes article detailing why XRP is considered a scam.