A lot of people have been talking about Ripple in recent days, especially as it recently surpassed Ethereum in total market capitalization. To the bullish crypto investor, this is a buy signal, along with the 120%+ increase in the last seven days. The price may even still have room to grow from here.
However, I am not writing this article to tell you why you should buy it, but rather to tell you why I don’t feel that Ripple will succeed in the long term, even if the price keeps going up in the short term.
The reason is simple; Ripple is not taking the concept of cryptocurrency and moving technology and society forward. Cryptocurrency, with the introduction of Bitcoin, was created to remove the need for a trusted third party AKA a centralized authority to process payments. In the words of Satoshi Nakamoto “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”.
Why is it essential to remove the third party?
Third parties hold all the control in transactions. They set the fees, they set the time frame, and they call the shots. If they decide that they do not want to accept your money, they do not have to. They have all the control in the payment process.
The introduction of Bitcoin showed a way payments could be processed between individuals without the need for a third party. It shows a way for individuals to have complete control of their money without a centralized authority telling them how and when they can have it, or what they are allowed to do with it.
Where does Ripple come into the picture?
Since Bitcoins introduction, we have seen many other cryptocurrencies introduced, each with a different variation of the idea that was presented to us by Satoshi with Bitcoin. The majority have stuck with the fundamental principle that we need to do away with the centralized authority and decentralize our currency to give the control back to the people.
Ripple does not do this. They do use some technology that is common in cryptocurrency, but they use it to speed up the EXISTING bank process. Essentially they are going out to banks and saying “Here is your current process, here is how we can do it faster, with blockchain.” The problem at this point is glaringly obvious. They have not eliminated the third party, they have merely transformed it. They have made it faster for the banks to send and receive your money. Ripple as a cryptocurrency itself is also not decentralized meaning the company Ripple has complete control, adding another party to the transaction along with the bank.
What they are saying is cryptocurrency should not just involve two people (sender and receiver), it should require a third party (the bank) and Ripple to process payments. Do you see the problem? In their vision of the future of payments, there are four parties involved, not just two.
This flawed vision is why I am not betting on Ripple longterm. I firmly believe that a key element of the cryptocurrency revolution is the elimination of the third party that has control of our money. All too often in the past, and even recently, banks and governments have used this control in their own self-interest, taking YOUR money, and then telling you what you what THEY can do with it.
When the car engine was invented, and subsequently the car, the primary form of transportation that it looked to transform was the horse and carriage, by eliminating the need for the horse. They did not say, let’s add an engine onto a carriage that runs while the horses are pulling it so that they do not get as tired and can pull heavier loads longer. If there was a company like this, they have long since been forgotten. This is why Ripple won’t last long term. They are merely trying to add the cryptocurrency engine into the existing system, that cryptocurrency is striving to eliminate altogether.