The digital currency world has now been heavily dominated by a huge list of virtual tokens. There was a time when the only digital token in this particular market was Bitcoins and it sure did make a powerful place for itself. Ever since the inception of the original solution of the Blockchain Technology in 2009, there have been way too many new players in the digital market like Bitcoin Cash, Litecoin, Ethereum, and what not. All these digital currencies flourish on the decentralized nature of their platform which enables a peer to peer electronic cash transfer system for its users where there is no central point of control.
Although not all of these digital coins have been able to make a space and mark for themselves in the digital market, one such name Ripple currently has the seventh highest market cap in the cryptocurrency industry. .
As mentioned above, the current valuation of Ripple has given it a certain power above the rest and its interesting to note that if you were to look at huge international companies like Uber and Airbnb, even they have a market valuation much less than Ripple. Both these companies fall short of almost $20 billion if compared with Ripple. This makes it a major player in the market. However, looking at the big picture, things always seem to be too good to be true and it seems like everything is going almost perfect for Ripple. But is there ever anything that is wholly perfect? Is there ever anything that is perfect with no loopholes or drawbacks to it? As one says that there are two sides to every coin, there is an ugly truth to Ripple too. Having analysed the finer details of this platform, it comes as a shock that this digital currency is in fact, not decentralized.
Ripple was not exactly designed to be a coin. By the standard definitions, it does not even qualify as a normal digital currency. By tradition, digital currencies value a coin with equal priority and standing as with the security, applicability, speed and network scalability. Contrary to this stark feature of a decentralized digital currency, Ripple does not hold XRP (the digital currency for Ripple) a sort of asset for investment. It rather focuses on strengthening the blockchain to its maximum extent. Every element of XRP has been nipped and tweaked into an unrecognisable form in a bid to achieve this objective.
Yes, Ripple does have a digital wallet like all other cryptocurrencies and decentralized blockchains do however this does not give it the status of decentralized. Like other cryptocurrency and blockchain platforms, Ripple is not open source. The ‘trustless’ nature of Bitcoin and others is what enables individuals to have nodes of their own. Yes, Ripple does enable cryptographic methods to secure its users but the nodes that it protects are actually ‘trusted’ operators on the Ripple network thus making it more efficient but completely ruining it of its open nature. Thus the trust-less nature of any digital currency platform which actually allows it to be qualified as a decentralized platform is completely absent in the Ripple architecture.
Two remarkable features of any digital currency are the ability to mine those tokens via a process called mining and the inability of these tokens to be tethered to any deflationary asset like minted coins or printed notes. Again, Ripple fails in both these aspects. It has no mining or miners. Typically there should not be any separate entities running a network for its own personal agenda, however, the mining process and such has been deemed untenable and unaffordable by Ripple since they claim that it slows them down. This significant elimination takes it further away from the position of decentralized.
Moreover, with any other digital currency platform, if all miners wished, they could consensually shut down their computers and thus freeze the entire network. But the lack of such miners in the Ripple network makes it impossible for its users to do such a feat with it. Further, on top of not having a finite supply, Ripple tokens can also be printed. This makes procedures of payments, money exchange and other activities much more reliable when done via Ripple and helps it maintain a non volatile and stable constitution however, digital tokens are not supposed to have the potential of storage as an asset. This completely robs Ripple of its decentralized position.
One of the most popular exchange desks, BitMEX, set up a research team to look specifically into the consensus protocol of Ripple and they came up with some rather scathing findings. They reported the presence of several complexities in the consensus protocol, the detailed inner workings of which they were not able to understand. They also could not make head and tail of the convergent properties that are vital for the consensus systems. Further in house testing revealed that Ripple could move the ledger forward since it had complete control over it which ultimately makes it centralized. Of course there is nothing wrong with a system being centralized, it is not a criminal offense, however, Ripple claims to be a decentralized network in its marketing strategies and in its terms of service which eventually means that Ripple has been making their business on false misleading information which thus makes it liable for suing.
When things eventually go wrong, Ripple can be sued. R3 Holdco filed a lawsuit against Ripple in the San Francisco court. The appeals court has denied Ripple’s efforts to expedite the appeal of resolving this particular lawsuit against them. Moreover, the case would soon be shifted to a New York court resulting which, Ripple would go through tremendous injury to its status. The lawsuit primarily states that Ripple failed to honor an agreement which would have given R3 Holdco the right to receive $1 billion XRP from Ripple. If we look at this from a different point of view, one would note that no one can sue Bitcoin. There is not central authority which is answerable or can be approached for redressals or can be challenged in a court of law. It is the decentralized nature of the platform which makes it qualify for such an independent form. However, this is not the case with Ripple. There is clearly a body in Ripple which has been dragged to court thus reclaiming the fact that Ripple is not decentralized.
Despite numerous marketing claims by Ripple stating and glorifying its business as decentralized, and making profits on that pretext, there is a massive amount of contrasting evidence that further cements the fact that it is in fact centralized. Such misleading claims can easily rid it of its glory and throw it into pools of despair and unreliability which would greatly affect its market value and reputation.