Ripple XRP - Has BitMEX Just Killed Ripple XRP for Good?

In the recent run-up to New Year 2017, Ripple XRP was surprising almost everyone on the cryptocurrency market.

Having languished at $0.7, $0.15, and $0.22 from January to October, Ripple suddenly started exploding in value. In fact, at one point in December, Ripple was trading at exchanges at over $4.

Sadly, Ripple has since experienced a cataclysmic price pull-back. What is more, new research into Ripple XRP by cryptocurrency exchange BitMex, might soon result in Ripple sliding even further in value.

Ripple XRP is Simply Far Too Centralized

The thorn in Ripple's side has always rested with the fact that Ripple XRP is a centrally controlled digital currency. Of course, Ripple has frequently argued that its blockchain technology isn’t really centralized, and this in itself has caused more than a little confusion.

Is Ripple Centralized or isn’t it?

Brad Garlinghouse, CEO of Ripple, accepts that Ripple is partially centralized at present but argues vehemently against the idea of Ripple XRP being centralized in the long-term.

Put simply, although the majority of nodes which process Ripple transactions are operated by Ripple at present, Ripple does steadily add new ‘attested validators’ to node lists and for every validator added, removes a node operated by Ripple itself.

Sadly, what the above really means, is that although Ripple does plan to eventually have third-party nodes process all Ripple XRP transactions, every third-party node operator will be picked by Ripple themselves. Much more importantly, it is this fact which has led to cryptocurrency exchange BitMex, identifying a (potentially) serious flaw in how Ripple operates.

Over Time Banks Themselves will Operate Almost all XRP Transaction Nodes

Because people have to essentially ‘trust’ Ripple to decentralize itself, cryptocurrency exchange BitMex, argues that few decentralization advocates will ever really trust Ripple. As a result, the Ripple blockchain will (potentially) decentralize in such a way which sees banks and existing payment processors control (and hold sway) over the most significant part of the XRP blockchain.

Ripple Might Already be intentionally Misleading Investors

Needless to say, several blockchain technology enthusiasts have already voiced concerns over Ripple XRP’s true decentralization plans. BitMex, however, also found a serious flaw with Ripple which hasn’t previously been made public.

Put simply, the value of cryptocurrencies like Bitcoin rests with the fact that the Bitcoin blockchain is fully transparent. At any one moment, anyone anywhere in the world can call up details of anytransaction which has ever taken place on the Bitcoin blockchain. Much more importantly, because Bitcoin transactions are validated by majority consensus, no independent third party can ever interfere with or manipulate transactions.

In mind of the above, what Bitmex recently discovered, is that it is impossible to independently verify how the Ripple blockchain itself records and processes transactions. - Or as the team itself put it: “The BitMEX Research team is unable to understand the detailed inner workings of the system or how it has any of the convergent properties necessary for consensus systems,”

Much more crucially, the BitMex research team goes on to state that Ripple: “Is essentially in complete control of moving the [Ripple blockchain] ledger forward, so one could say that the system is centralized.”

What Investors Need to Know About Ripple XRP Going Forward

Given BitMex’s damning criticism of Ripple, Ripple has responded with a full rebuttal of all claims made against them. Key points for investors to consider, however, include the following:

• Ripple doesn’t seem to settle transactions via majority agreed blockchain consensus. - Instead, a central server manages transaction discrepancies and can potentially censor transactions themselves

• The Ripple ‘attested validation’ idea of steadily decentralizing the Ripple blockchain, will likely lead to eventual majority control of the Ripple blockchain by third parties with vested interests (likely banks)

• Ripple isn’t mined and has openly distributed vast XRP reserves to Ripple founding members and company employees

Ripple Can Freeze & Steal Cash just Like a Bank Can

The full reading of BitMex’s research into Ripple XRP is interesting, to say the least. The most damning BitMex revelation, however, regards the fact that Ripple (in terms of the company rather than the cryptocurrency) can freeze and seize Ripple XRP coins any time it chooses.

Given what a strong accusation this is to make, it is important to clarify that Ripple openly admits that freezing digital assets is possible. - Ripple has this feature (it says) in order to comply with the likes of Federal investigations.

Sadly, what BitMex discovered is that the first time Ripple froze funds of a user, it was due to an in-company dispute with then Ripple employee, Jed McCaleb. Much more alarmingly, Ripple didn’t freeze Jed McCaleb’s Ripple holdings. Instead, Ripple froze XRP tokens belonging to a family member of Jed McCaleb.

Should You Invest in Ripple XRP in 2018?

In late 2017, the driving force behind Ripple XRP's increasing value lay with Ripple wooing investors with promises of lightning fast transaction speeds.

Sadly, as it transpires, Ripple XRP is arguably little different from the digitized fiat currency used by the world already. In fact, many can now argue that Ripple is in no way decentralized and because of this fact, in no way comparable to a genuine cryptocurrency at all.

Of course, Ripple itself is still under rigorous development and somewhere down the line, true decentralization might happen. The only question is, will people ever really trust a cryptocurrency which seems to deliberately obfuscate how it really operates?