Why Ripple’s CEO Attacks Bitcoin
According to various media reports, Ripple’s CEO Brad Garlinghouse stepped up his recent attacks on bitcoin during a speech at the 2018 Stifel Cross Sector Insight Conference in Boston, telling the crowd:
“I’ll tell you another story that is underreported, but worth paying attention to. Bitcoin is really controlled by China. There are four miners in China that control over 50% of Bitcoin. How do we know that China won’t intervene? How many countries want to use a Chinese-controlled currency? It’s just not going to happen.”
During the conference, Garlinghouse also made it clear that he does not believe blockchain technology will replace banks as we know them, saying that “blockchain will not disrupt banks, [although] it will play an important role in the way our system works. It’s a short-sighted view.”
Ripple loves banks
Perhaps not surprising, Garlinghouse holds a much more favorable view of the cryptocurrency issued by his own company, Ripple’s XRP, describing it as “the best digital asset for settlement.” He added that while XRP needs only 4 seconds to settle a transaction, “bitcoin today takes 45 minutes.”
While confirmation times on the bitcoin network may reach 45 minutes on certain days, it is far from the norm. In fact, the 7-day average confirmation time recently peaked at 25 minutes, while the norm this spring has been somewhere between 15 and 20 minutes, according to data from Blockchain.info.
It should also be pointed out that Ripple, the San Francisco-based company Garlinghouse leads, has built its entire business model on working with banks to facilitate faster cross-border transactions using blockchain technology. From this perspective, it only makes sense that Ripple does not see banks becoming obsolete as a result of blockchain technology.
Rather than asking which cryptocurrency offers the fastest confirmation time, the question should be what motive Brad Garlinghouse and Ripple has for continuing to attack bitcoin.
In fact, this is not the first time Garlinghouse has criticized bitcoin publicly. In a recent interview with CNBC, he said about bitcoin that “originally people thought it might solve a payments problem, but when you have an asset like XRP that’s a thousand times faster and a thousand times cheaper on a per-transaction basis, bitcoin can’t really compete on that level, you know an XRP transaction costs fractions of a penny and it settles in three seconds.”
Ripple XRP is not the solution
While Garlinghouse’s remarks may be more or less accurate from a technical perspective, Ripple’s own cryptocurrency XRP also has its own clear weaknesses.
One key concern that many in the cryptocurrency community share is that Ripple XRP is hardly a decentralized currency. In fact, more than 50% of the total supply of XRP is controlled by the company itself, which undeniably gives them the ability to manipulate prices in the market.
Another major problem with Ripple’s XRP token is the fact that most banks and other financial institutions who work with Ripple have shown little interest in using the token. As it turns out, the main services offered by the company do not require the use of the XRP token, which has made many people question the company’s motive for issuing XRP in the first place. Could it be that Ripple’s XRP currency was issued mainly to raise money for the company, rather than offering any real utility value for users of Ripple’s services?
Given the fact that XRP token holders have no ownership of Ripple equity and that banks are choosing not to use it; many people have seriously questioned the underlying utility value of the XRP token. Whether or not Ripple XRP will be a good investment for holders in the long-term remains to be seen, but defending it by attacking bitcoin does not seem to be a very helpful strategy.