Ripple update: Part Owner of the Technology (XRP)
One of the things I think people struggle with is the relationship between their investment in XRP as a digital asset and ownership in Ripple the company. What is often made clear is that ownership in XRP tokens does not denote ownership in Ripple in the classic sense, as an investment security, like a stock or bond.
I would argue ownership of XRP is actually better than a bond or a stock and I present the following reasons why:
1. XRP’s supply is finite, and integral to the ledger itself. It is therefore central to the use case and utility that anyone hoping to utilize the benefits of such a confederated consensus ledger hopes to derive (scalability, settlement speed, etc.) A stock or bond, or any classical investment vehicle, has no such properties, corporations can function and thrive without them in the public sphere. Stock and bond issuances are centrally controlled and are at the discretion of the majority holders.
2. Owning XRP is literally owning part of the technology itself. In the most technical sense, the token is the portion of the blockchain code necessary for trustless value transfer, which depends on no one single agent. Can you imagine how valuable it would be to own part of Google’s search algorithm, or the code that underpins Apple’s App store? You can’t. The technology is all at the end of the day, Ripple just happens to have and recruit the best people to leverage it. There are lots of smart people in the world that can leverage it too.
3. Detractors argue that ownership in XRP does not automatically confer the success and profitability of Ripple. The most often cited example is how the number of xCurrent contracts signed to date are having no immediate effect on the speculative market price of the token. This is true, however it ignores the accumulating of future leveraged network effects to be leveraged by the Ripple team (with xVia/xRapid). Let’s not forget, this low beta correlation works both ways. The fact that ANY corporation that leverages XRP as a digital asset can incur value on the token when used in utility (i.e. COIL or as yet unheard of companies in some garage somewhere) to me reflects a future added benefit, not a negative. As an investor I am potentially holding a digital asset that is inherently diversified, not singularly tied to the success or failure of one Corporation. Can we say that about any stock or bond presently in existence? What are the real benefits of stocks anyway, voting rights, dividends, bankruptcy entitlements as a creditor? How do these benefits compare to the possibility of real diversification when a fully realized ecosystem is developed? What better hedge against bankruptcy or corporate failures is there than a technology that can continually rise from the ashes depending on it’s wielder? When the value of my asset is reinforced by a legion of corporations, not just Ripple or COIL, it begins to reflect and economy, not a company.
4. When I hold stocks or bonds, how liquid is that asset? What degrees of freedom do I have with it? Can I tell fidelity to bundle it with my retirement account, only if their fund managers wish it so. Can I transfer it to another firm to manage on my behalf for lower fees? Can I directly leverage it as collateral for raising capital loans without having a team of corporate contract lawyers? Can I pay global debts and settle instantly for my vendors with a bond or stock without incurring massive hurdles and fees?
Freedom means many things, but to me, cryptographic digital assets that settle via consensus, and without intermediates, begs the imagination, and makes traditional assets seem like playthings.
About Ripple (XRP)
Ripple connects banks, payment providers and digital asset exchanges via RippleNet to provide one frictionless experience to send money globally. Banks and payment providers can use the digital asset XRP to further reduce their costs and access new markets. XRP is the fastest and most scalable digital asset today.
Author: Santiago_Velez
Score: 18
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