The argument over whether XRP is a security remains a popular debate in the cryptocurrency industry. Now, one expert is saying that XRP isn’t even a “real cryptocurrency.” Meanwhile, the SEC has yet to issue any official word of whether or not it considers XRP to be a security.
Major Players Shying Away from XRP
Coinbase recently announced that it was considering adding five more tokens to its catalog of supported cryptocurrencies. Stellar Lumens is one of the prospective tokens that the San Francisco-based cryptocurrency exchange platform is looking to add. Many market observers are aware of the rivalry between Ripple and Stellar.
Less than a fortnight ago, Steven Cohen announced that he would be investing in a cryptocurrency-based hedge fund – Autonomous Partners. The Ariana Simpson-led hedge fund doesn’t invest in XRP tokens. Commenting on the matter, Simpson said:
I have a lot of concerns about the level of centralization there, and I have regulatory concerns if what they have issued is a security.
For all of the progress made by Ripple thus far, the controversy surrounding the XRP tokens is undoubtedly a sore spot for the company. It is even the subject of multiple lawsuits with investors accusing Ripple of selling unregulated securities in the form of XRP tokens.
XRP – Not a Real Cryptocurrency?
Speaking to Express.co.uk, Anatoly Castella, the CEO of Elpis Investments boldly stated that XRP is not a real cryptocurrency. According to Castella, the token doesn’t conform to the “purest interpretation of cryptocurrency.” The Elpis Investments chief also went on to say:
Ripple resembles a fintech platform combining the best elements of fiat money and blockchain cryptocurrency. It is ‘Digital Fiat,’ not a cryptocurrency.
Castella also faulted the initial premise behind the Ripple technology saying it didn’t measure up to the philosophy of real cryptocurrencies like Bitcoin and Ethereum. He noted the latter examples were a store of value whereas Ripple’s token seems more like digital fiat issued by a single company. He identified the lack of mining on the network as a significant red flag, saying:
Ripple has no mining or miners whatsoever. Instead, transactions are powered through a ‘centralised’ blockchain to make it more reliable and faster. XRP was mined all at once by the parent company – Ripple Labs Inc – with a majority of the cryptocurrency held by them.
Castella went on to forecast that XRP stood at a disadvantage of never being in a position to enjoy favorable SEC regulations like Bitcoin and Ethereum. He also predicted that if the SEC classified XRP as a security, then a massive but brief value decline would follow.
Do you agree that XRP is not a real cryptocurrency? Keep the conversation going in the comment section below.
Images courtesy of Twitter (@AnatolyCastella), Shutterstock.