U.Today is supported by its audience. When you buy through referral links, we may earn a commission.

Despite the Criticism, Ripple Arguably More Decentralised Than Bitcoin

Opinions
Fri, 01/18/2019 - 10:58
Put your
crypto to
work
  • 1.30

    Interest per week

  • 67.5

    Interest per year

  • 3.60

    Interest rate

Join Now!
Sponsored by Celsius.Network
  • Many won’t even class XRP as crypto because of Ripple’s control, but they could also argue that the XRP token is more decentralised than BTC

Cover image via U.Today
Contents

Ripple, and its token, XRP, have faced a constant barrage of criticism relating to their decentralization of the token over the years. Many cryptocurrency purists have criticised their inner workings with Ripple, the company, clearly in charge of the XRP token and its distribution.

However, this allegation has been as equally denied by the those at the head of Ripple; in fact, it has even seen the CEO, Brad Garlinghouse, state that the XRP ledger is in fact more decentralized than both Bitcoin and Ethereum.

This statement alone will get many raring for a fight, but a closer inspection and interpretation of what it means to be decentralised could indicate that Ripple has a point. They could indeed argue that they are more decentralized than the other two major cryptocurrencies, based on the mining pools.

It is well known that controlling the majority of the mining of traditional proof-of-work coins, like Bitcoin and Ethereum, can lead to a 51% attack, which destroys the decentralisation of the blockchain and hands full control to one person, or group, or pool.

Bitcoin has been flirting with the 51% attack recently, and previously, but for Ripple, it is a different story, as they only have seven percent control of the validators. Looking at the interpretation of decentralisation, there technically have been more chances for Bitcoin to be controlled by one group than there has Ripple – so is it less decentralised?

Making claims

To be honest, the idea of decentralisation is really up for debate, and it is also dependant on interpretation, thus the claims being made on their side of these fence are debatable, but it is interesting to hear the thoughts of Garlinghouse.

“It is very clear that the XRP ledger is decentralized,” said the CEO of Ripple. “Ripple runs seven validators, which is about four percent of all public validators.”

He added:

“By almost any measures now, the XRP Ledger is more decentralized than the Bitcoin ledger or Ethereum ledger, where you have a very small number of miners controlling you know well past 50% of mining power.”

It is true that Bitcoin’s mining has almost been monopolised in the past by the likes of Antpool, BTC.com, and ViaBTC, with Bitmain at times having the power to launch a 51 percent attack, but never acting on this. However, it shows just how much the mining has been centralised in Bitcoin.

Ripple’s argument

If one was to base the mining and validation of cryptocurrencies as the key determining factor of their centralisation, then it would be preposterous to say that Bitcoin is decentralized.

Ripple, the company, despite having control in different areas of the XRP token, only controls seven percent of its validation. Thus, on this basis, they have very little control and it should be argued that XRP is decentralised.

cryptocurrency

 

A lot of this argument is also predicated on the algorithms that these two coins use, however.

Bitcoin and Ethereum use proof-of-work algorithms. This system rewards miners for validating transactions by paying a fee for their work. This was a great starting point for a decentralized system that incentivizes complete strangers to contribute to the greater good of a network and make forward progress.

But as time has gone on, clear limitations have manifested. Blockchains that use proof-of-work can be subject to centralized control, where a few miners have significant control over the system.

The XRP Ledger uses a consensus protocol that relies on a majority of validators to record and verify transactions without incentivizing any one party. Validators are different from miners because they aren’t paid when they order and validate transactions.

Today, these validators operate at locations across the globe and are run by a broad range of individuals, institutions, asset exchanges and more.

More to it

As mentioned, this form of argument in regards to decentralisation only takes into consideration one aspect. But in this aspect, indeed, Ripple is superior. However, when it comes to purists and believers in how blockchains should operate, many have an issue with a company having discretion over tokens.

Ripple has been a coin that differs substantially from most of the top 20 coins by market cap – that does not necessarily mean it is wrong, nor right, but it is certainly showing that things can be done in different ways in the blockchain space.

About the author

Darryn Pollock is an award winning  journalist from Durban, South Africa. He picked up Vodacom’s Regional Sports Journalist Award in 2017 while expanding his Blockchain and cryptocurrency reach.  He is a contributor to Forbes, Cointelegraph, Binary District, and of course, U.Today. Darryn’s belief is that Blockchain technology will be the driving force of the next technological wave and it is the obligation of journalists and writers to tell its emerging story with integrity and pride.

Recommended articles
Why Crypto Investors May Not See an "Alt Season" For many months ahead

Why Crypto Investors May Not See an "Alt Season" For many months ahead

Bitcoin (BTC) Ecosystem Healthier than 2014 and BitMEX Research Explains Why

Bitcoin (BTC) Ecosystem Healthier than 2014 and BitMEX Research Explains Why

Bitcoin Price (BTC) At Risk of Major Correction to $4,800 as 3 Key Indicators Light Up

Bitcoin Price (BTC) At Risk of Major Correction to $4,800 as 3 Key Indicators Light Up

Why Crypto Investors May Not See an "Alt Season" For many months ahead

Opinions
Sat, 03/28/2020 - 18:45
Put your
crypto to
work
  • 1.30

    Interest per week

  • 67.5

    Interest per year

  • 3.60

    Interest rate

Join Now!
Sponsored by Celsius.Network
  • Crypto investors do not see an alt season coming for many months ahead, as the crypto market corrects.

Cover image via stock.adobe.com
Contents

As the bitcoin price fails to see upside momentum, the crypto market is at risk of a deeper pullback in the short-term. While the bitcoin price sustained the $6,000 level for an extended period of time, altcoins have continued to see more downside.

Well-known trader DonAlt said:

“BTC looks like it could go up, down or sideways. Alts look like they could go down, down or down.”

The bitcoin price has been on a decline as of late primarily due to the drop in appetite for high-risk assets. Altcoins present additional risk, which investors are seemingly unwilling to take.

Altcoins seem battered, as crypto market loses tens of billions of dollars

Since March 7, within about three weeks, the valuation of the crypto market has dropped from $264 billion to $175 billion, by around $89 billion.

Consequently, altcoins underperformed against both the USD and bitcoin, as investors flocked to stablecoins like Tether.

After the overnight 5 percent drop in the bitcoin price, technical analysts foresee a steep drop ahead for bitcoin in the near-term. Strong support levels for bitcoin are found at $5,800 and $5,250, according to crypto trader Michael van de Poppe.

Poppe said:

“Brokedown after a distribution pattern and clear rejection of the $6,900 area. On the first support around $6,000-6,100 here. Might be testing $6,400 before continuing to drop, primary level for support is $5,800 and more heavily the $5,250 area.”

The altcoin index perpetual futures on FTX indicates a massive 56 percent drop in the altcoin market within merely 43 days, dropping to levels unseen since 2017.

The altcoin index perpetual futures on FTX drop as crypto market slumps
Source: TradingView.com

Market is exhausted

Similar to the U.S. stock market, based on the performance of altcoins in the past two weeks, it is highly unlikely that the altcoin market sees the so-called “alt season” until the global economy rebounds from the economic consequences of the coronavirus pandemic.

There is a clear lack of buy orders and buying demand across all exchanges and assets within the crypto market, increasing the probability of a larger correction to hit the entire asset class in the near-term.

As financial analyst Koroush AK said:

“Most businesses and individuals still have 1/2 months runway. Assuming handling the virus lasts several months not several weeks. Let's see how many want to be holding, let alone buying, bitcoin when struggling to pay bills and put food on the table.”

The low cash buffer of small businesses, which on average is estimated to be 29 days, leaves the U.S. and European economies at risk of continuous decline in the first half of 2020.

About the author

Joseph Young is an analyst based in South Korea that has been covering finance, fintech, and cryptocurrency since 2013. He has worked with various recognized publications in both the finance and cryptocurrency industries.

Recommended articles
Why Crypto Investors May Not See an "Alt Season" For many months ahead

Why Crypto Investors May Not See an "Alt Season" For many months ahead

Bitcoin (BTC) Ecosystem Healthier than 2014 and BitMEX Research Explains Why

Bitcoin (BTC) Ecosystem Healthier than 2014 and BitMEX Research Explains Why

Bitcoin Price (BTC) At Risk of Major Correction to $4,800 as 3 Key Indicators Light Up

Bitcoin Price (BTC) At Risk of Major Correction to $4,800 as 3 Key Indicators Light Up