The digital asset XRP rose in value by more than 32,000% in 2017. Since then, it has fallen by 75% in 2018. Through it all, fascination around the asset remains remarkably high: cryptocurrency lovers tend to feel strongly positive or negative about XRP and about Ripple, the company behind it.
Skeptics call into question why the XRP token has soared in value, driven by speculators with no actual understanding of the token’s purpose; they also argue that XRP is not truly decentralized, since Ripple, the company, owns 60% of the XRP supply.
“XRP and Ripple are separate things”
“It is endlessly frustrating to me that people are unable to distinguish the fact that XRP and Ripple are separate things,” said Ripple chief market strategist Cory Johnson at Yahoo Finance’s All Markets Summit: Crypto last week. “I mean, no one calls Exxon Mobil oil. Exxon Mobil has a vested interest in seeing that oil is successful, but that doesn’t mean it’s the same thing.”
Indeed, the XRP token is used as a vehicle for moving cross-border funds in one of Ripple’s software products, xRapid. But it is not used in its main product, xCurrent, which more than 100 clients are currently pilot-testing.
Most of the people trading more than $1 billion worth of XRP each day are likely unaware of the nuances of how XRP is used—a fact Johnson acknowledges. “We had the best first quarter the company’s ever had, we signed more deals, got more companies into production, deals coming every six days instead of every six weeks like a year ago,” he said. “Yet XRP had the worst quarter it’s ever had. So I would argue that they’re very much separated.”
Ripple CEO Brad Garlinghouse has courted controversy further by responding directly to reporters who question Ripple’s business claims; he also told Yahoo Finance in February that he doesn’t like to call XRP “cryptocurrency,” despite the fact that it is the No. 3 biggest cryptocurrency by market cap.
So the confusion and the passion around XRP linger. And Johnson, Ripple’s newest executive, has a theory about why that is.
“People have money at stake”
“I think that XRP in some ways is crypto 2.0,” Johnson said. Bitcoin, he argued, “opened our eyes to what’s possible, but the failings of the technology also became apparent.”
But it isn’t just the XRP technology that excites XRP fans—especially since so many holders of XRP don’t care to understand the technology anyway.
“Why is there sort of a religious-like fervor around XRP? I don’t think it’s just because the technology is better,” Johnson said. “I think it’s because people have money at stake. You know, when the internet was developed, the bottom layers of the technology were free… There was no value assigned to the most basic layer of the technology. Across all of crypto, the most fundamental layer has a dollar price assigned to it. When your money’s at stake, you start to pay a little more attention to things. I also think that’s one of the reasons there is such FUD [fear, uncertainty, and doubt]. People who understand it and have made a bet somewhere, want to see the other things fail. I think there are bitcoin maximalists who hate XRP because it’s not bitcoin. I think there are ether holders who hate XRP because they hold ether.”
Earlier in the day at the same Yahoo Finance summit, SEC official William Hinman announced that the SEC does not view ether as a security. Johnson, in response, said, “It’s really clear to us that XRP is not a security.”
He also defended recent reports that banks have been slow to warm to Ripple’s technology. “It’s a new technology,” Johnson said. “They’re starting to adopt it. We’ve already got 100 customers using it. That says to me there’s something there, and banks and financial institutions see some value in it. From the start, we’ve said for a very long time, the most obvious use cases for our xRapid product, which uses XRP, are remittance companies, not banks. And I think that’s still true.”
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.