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 As of today, the market capitalization of Ripple (token XRP) has surpassed that of Bitcoin, occupying the first place. Many people are sighing, "Can't see, can't understand, can't see, it's too late." But few people actually study the real value behind it. In the early years, I held a portion of XRP and sold it all after studying the operating mechanism behind it. I still don’t regret it. The reason why I share my thoughts is not to provide investment advice to anyone. I hope you can make your own judgment based on full understanding. You may be able to make a profit by chasing the rise in the short term, but what I'm talking about here is long-term value investment. Reason 1: Ripple’s design philosophy is not perfect The Ripple network was created to solve currency circulation problems, such as low transfer efficiency, high remittance fees, and cumbersome currency settlement. Early Ripple solutions were based on trust chains. For example, both Xiao Hei and Xiao Hong trust Xiao Bai, so they hand over all their money to Xiao Bai for exchange and settlement. By 2013, they added the concept of gateway, which is equivalent to Xiaobai changing from a human to a clearing agency. It's the same as when we give money to Alipay and the bank. Ripple has indeed solved some problems, such as fast transaction speed and convenient currency settlement, but the essence of the gateway is still a centralized bank. This bank is not based on consensus. In principle, as long as users trust you, you become a gateway. Even the gateway can forge ledgers or issue counterfeit currency (the currency of the gateway is just a symbol called CNY, which is essentially a debt). If one day the network administrator declares bankruptcy or closes down, the money in the user's wallet will be 0. The value of Bitcoin is determined by its code and algorithm, not a person or a decree. Everyone is an auditor of the network and makes sure all transactions are correct. But Ripple is not as open source and decentralized as Bitcoin, and it never will be. Reason 2: Ripple is a centralized currency Ripple is a cryptocurrency, but it is different from the Bitcoin or Litecoin we often call it. Although we call it a token, its actual value cannot be evaluated. Why do you say that? Because Ripple is a centralized currency. In fact, XRP did not exist in the early Ripple system. In fact, the Ripple payment system can run well even without XRP. However, in order to allow various currencies to have a unified measurement unit in the Ripple network and make transactions between different currencies simpler, Ripple Labs issued XRP after taking over the Ripple project. From this point of view, XRP is more like a virtual currency than a cryptocurrency. As a unified trading unit, the exchange rate between XRP and legal currency cannot be stable. It is not as good as Tether, which can benchmark against the US dollar (so-called). And because Ripple's code is not open source, the server source code has not been released. The OpenCoin company behind it controls the server software, which was earlier written in C++. It is very possible for any centralized group to control it. How to understand it? In other words, from the very beginning, the generation of this token was decided by a few people. There was no need for mining or supervision of the entire network. The issuance amount could even be tampered with by modifying the code without authorization. Reason 3: Ripple is an inflationary currency XRP is issued by an organization called Ripple Labs, with a token issuance of 100 billion (you read that right). Half of it was given to itself, the development team 20 billion XRP, and Ripple Labs controlled 30 billion XRP to promote the Ripple payment network. What’s interesting is that the company will distribute 50 billion XRP to users for free. In the early days, as long as you registered a wallet, you would have 5 XRP. Nowadays, most of the XRP circulating in the market comes from this part. ； It is said that more distributions later will be given to partners or banks (it doesn’t cost money anyway). Well, the issuance of 100 billion coins increases the possibility that a few institutions or individuals can manipulate currency prices by hoarding currency. 80 billion is used for giving away, and XRP is circulated to generate value through the gifted coins, then the team’s 20 billion can be cashed out, which sounds like a good get-rich-quick story. You never know when Ripple Labs will issue additional currency. Sometimes the price of XRP is already very low, but Ripple Labs continues to issue coins. When the price of XRP is very high, we cannot buy the coins. No one knows what the logic behind this is. It just so happens that a few months ago the company announced that it would withdraw part of Ripple, and recently it has continued to offer favorable conditions to cooperate with major banks. I will not hold any conspiracy theories. So my conclusion is that Ripple is most likely to be a 100% inflationary currency. Buying Ripple is not as reliable as holding the legal currency that controls the state power. The price of XRP has skyrocketed in recent weeks, which is indeed tempting. I hope investors can think independently and keep their eyes open. The tulip bubble burst in 1637 and prices fell by 90%. To paraphrase Einstein: A madman does the same thing over and over again, but expects different results. ----- The following is my small secret circle, sharing everything I learn and invest in blockchain. If this article appeals to you, you will get more by joining.  ¥99 for the first 100 people, and it will increase to ¥199 for the 100 people after that. |
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