It must be hard being the Rodney Dangerfield of cryptocurrency. For all of Ripple’s success, it still gets no respect.

Just last week, Ripple was snubbed by the new Morgan Creek Digital Asset Index Fund for not meeting the investment house's standard of a "decentralized network."

Yet the fact that Ripple’s XRP token currently enjoys a $12 billion market cap, third behind only bitcoin and ether, must ease the sting a little.

You could even be forgiven for thinking that Ripple’s position on the leaderboard must mean it’s extremely popular among crypto enthusiasts. If only it were so simple.


It’s important to understand that Ripple (the company) and its success is simultaneously distinct from and yet intrinsically tied to the Ripple open-source payment protocol (the XRP Ledger) and the XRP token. Launched in 2012, Ripple Inc offers software products designed for the banking industry and payment-processing companies that make use of its blockchain protocol. The only reason the XRP token exists at all, it seems, is to facilitate transactions between financial institutions. And there is no dispute XRP does this extremely well.

In fact, if XRP were judged on its transaction speeds and costs alone, even the hardest of die-hards would have to tip their hats. Problems begin, however, when Ripple evangelists profess unto the world that they possess the one true coin—our old-fashioned definitions of “cryptocurrency” be damned. Hats then remain held firmly upright, along with middle fingers.

Don’t call it a crypto

Let the record show that Ripple’s technology employs the use of cryptography, and so, by that standard, meets the bare minimum criteria for a cryptocurrency. It lacks, however, virtually all other common features.

Ripple’s XRP token was “pre-mined,” meaning that unlike Bitcoin and Ethereum, Ripple’s XRP mines were tapped dry on day one. When XRP launched, all 100 billion coins were unloaded. That is, unloaded onto the founders’ wallets (to the tune of 20 billion XRP) and into Ripple Inc’s coffers, which retained 80 percent of the coins. Ripple has since distributed XRP as it sees fit to its clients and still controls roughly 60 percent of the supply, defying every possible interpretation of “decentralization.”


Yet, Ripple execs recently declared that the XRP Ledger is even more “decentralized than both Bitcoin and Ethereum.” This despite the fact that the XRP Ledger is positioned by Ripple itself as “trust-based alternative” to Bitcoin and Ethereum, in which transactions are validated by a group of “trusted” nodes centrally controlled by Ripple.

This truly borders on “depends upon what the meaning of the word 'is' is” level chutzpah. (And maybe explains the inexplicable invite Bill Clinton received to keynote Ripple’s Swell conference this fall.) Regardless, Ripple’s masterful trolling of the crypto community is enough to make us wonder if the company hasn’t found a way to tap into a new source of energy: the angry tears of crypto purists.

Let the hate flow through you

All the reasons why we can’t call Ripple a “real cryptocurrency” appear to be why big banks are so keen on Ripple’s technology: More than 100 financial institutions now use the Ripple platform.

And yet, banks want nothing to do with XRP tokens and are largely reluctant to hold XRP for longer than the four seconds it takes to complete a transaction. In fact, the vast majority of Ripple’s institutional clients prefer not to use XRP as a “bridge currency” at all and instead settle transactions in fiat. This leads some pundits to wonder why, then, XRP holds any value.

While the love Ripple receives from banks may hurt its street cred more than it helps, the growing list of big-name partnerships in the financial world creates the illusion of “mass adoption” to the casual observer and investor. It's the speculative promise of XRP’s future that drives up the price, further testing the purists’ sanity.

Still, in an industry yearning for “real-world” acceptance, Ripple has proven itself to be a useful technology and found a home within a trillion-dollar industry. While its cryptocurrency may be a running punchline, Ripple and its supporters hope to be the one's laughing all the way to the banks they unapologetically serve.

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