RE: ICO (Ripple) Case Study – Understanding What, Who, Why, When, and How - Part 1 (What)
this is a topic worth discussing about, thanks @epan35 for providing the platform,
Recently, ripples have being making so much waves, it got to a point that i was almost tempted to invest
but on running some preliminary background, i found some information, which bothered me, i will discuss them below and expect feedback on your opinion as well as your other followers
as i am aware, most network creators usually only keep a fraction of the tokens for themselves, pre-selling the rest to anyone that wishes to buy some. Ripple, however, still owns about 60% of the initially issued tokens.
i find this troubling and here is my reason
The company could try cashing out and potentially crash the market. It is very unlikely though, however. one must consider all possibilities
Also, since the network fees are paid through ‘burning’ XRPs, they essentially enrich everyone in proportion to the amount of XRPs they hold (if 1% of the tokens got burned, the remaining tokens would be worth about 1% more provided the market doesn’t change). This means Ripple Labs is essentially earning 60% of all network fees on the network. This probably doesn’t amount to much at the current time, but it may be more important in the future.
Lastly, the amount of XRPs owned by one company gives it a negative reputation. A lot of people in the crypto space dismiss Ripple outright as a ‘pre-mined scamcoin’ just because of a number of coins owned by Ripple.
The founders of Ripple, Jed McCaleb, Chris Larsen and Arthur Britto, gave themselves 20bn XRPs early on. This later came to bite Ripple. McCaleb left the team to start his own version of Ripple called Stellar, and decided to sell his XRP stash, resulting in a legal kerfuffle, a settlement and a schedule for how those coins may be sold.
If those numbers are correct, McCaleb is still cashing out $20,000 per week, and come 2019, he will be able to cash out 750m XRP (worth ~$256m at today’s price of $0.34 USD/XRP). Not an ideal situation if the money from your network will be going to a former employee and building your direct competitor to the tune of a quarter of billion dollars.
i have my reservations, but i would like to hear more from other crypto gurus
Some great points @charles92! I think you highlight some of the issues that exist with Ripple. The conflict of interest is a huge glaring one. Not sure how one can really get over the fact that they can issue new XRP whenever they want to. But it would be to their detriment as it will dilute their value. The fall out from the founders aside, which I think is valid enough to avoid investing but I think XRP does offer some glimpse into a new world of cross border transactions. I would be comfortable investing (a small portion) into the fact that the company could offer a compelling new way of transacting. Part of my rationale (and I admit is not a good one) is FOMO. But that's my two cents.
You make a good point too @epan35, if anything goes wrong, it will be to their detriment and such bad reputation is not good for business, i can also see the broad prospects of the coin, so i can fully concur with your rationale being FOMO
i know there is nothing without risks in business, i hope this pays out well for you
💗👍