How XRP Reserves May Affect Ripple’s Future

ยท 04 Jan 2019 in Crypto News
Carlos is an international relations' analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.

Ripple, one of the companies that work with the popular digital asset XRP, owns 60% of all the XRP tokens ever created. At the moment of writing this article, these funds are worth around $22 billion. However, there are also some important figures working at Ripple that own another important part of the circulating XRP. This is something that could affect the community or Ripple’s future in a negative way.

XRP Reserves Could Pose Risks for XRP Holders And Ripple’s Future

XRP is the second largest digital asset after Bitcoin (BTC). There are some crypto enthusiasts that have always said that Ripple currently holds a large amount of XRP. This is one of the reasons why, Bitcoin and Ethereum (ETH) supporters, among others, believe that XRP is centralized. XRP has over 60% of its supply divided among a few individuals and companies.

Due to this situation, unfavourable regulatory issues could target XRP and Ripple. This is something that would be harmful to holders. For example, the Securities and Exchange Commission (SEC) could consider that XRP is too centralized and thus be considered a security.

Ripple and XRP enthusiasts are very worried about regulatory agencies considering it as a security. If that happens, its expansion around the world as a way to transfer money across borders could be challenged. At least, it will make things more difficult for this asset.

Ripple has been working on different products and services focusing on financial companies. Ripple’s official site says that XRP has been created to offer ‘banks and payment provides a reliable, on-demand option to source liquidity for cross-border payments.’

BitMEX Research reported that at the time of distribution XRP was allocated among the founders. Chris Larsen received 9.5 billion, the same as Jed McCaleb. Arthur Britto received just 1 billion XRP. At the time of writing, only Chris Larsen is still actively participating in Ripple’s development.

It is unknown which are Brad Garlinghouse and David Schwartz holdings. Mr. Garlinghouse is the current CEO of Ripple and Mr. Schwartz is the CTO.

This is something that could be negative for XRPs price. Those who own large sums of XRP could sooner or later start to sell their tokens, adding selling pressure to XRP markets. At the same time, XRP has a lower trading volume than Ethereum and Bitcoin, which makes the markets more vulnerable to large orders.

Investopedia commented on this issue:

“One risk of low-volume stocks is that they lack liquidity, an important criterion in stock trading. Liquidity is the ability to be easily bought or sold in the market without a change in price.”

Some XRP enthusiasts are even worried about McCaleb selling its holdings and increasing the selling pressure in the market. According to the crypto analyst Kyle Samani, Jed McCaleb is selling more XRP than he is supposed to.

Additionally, McCaleb currently works on the Stellar Lumens (XLM) platform, a strong competitor for XRP and the sixth largest cryptocurrency in the market. Ripple is also playing an important role in selling XRP to the market to fund its expansion.

However, not everything is negative about this thing. Having the possibility to have a centralized organization allows the company to move forward and expand faster than other blockchain and crypto networks currently available in the market. Where Bitcoin and Ethereum fail, Ripple already has it solved since the decision-making process is much easier for Ripple.

XRP is the third largest virtual currency in the market. It has a market capitalization of $15.32 billion and each coin can be purchased for $0.375. 

Learn More

Want to learn more about Ripple? Read our guide to Ripple, Ripple Labs, and XRP, a breakdown necessary for any crypto investor. A search for Ripple on our site will bring up the latest XRP articles like coverage on a Ripple strategist claiming XRP is more used than BTC.

Interested in investing in Ripple? You’ll want to start with our XRP price prediction article and then go into our current Ripple technical analysis. (Always do your own research and read the site disclaimer). If you’re interested in buying Ripple, you can learn how to buy XRP on Binance, our suggested exchange for investors.

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