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In this post I'm going to lay out exactly what XRP is, and why I believe it's a worthless pump & dump scheme disguised as the 'worlds bridge currency.'XRP was founded in 2012 by Jed McCaleb and Chris Larsen. The idea of XRP was for it to be a real-time gross settlement system, currency exchange, and remittance network. Basically, it was supposed to be a better version of Bitcoin when it comes to transaction speeds and fees. That sounds great right?! Well, even before XRP was popular there were some questionable decisions made by the founders.The first decision made was that XRP would be completely pre-mined. This was the first time in history that a cryptocurrency would ever be pre-mined. If you aren't familiar with what a pre-mine is, essentially it is a method in which new coins are created. With Bitcoin, new coins are created by the miners. It is called 'Proof of Work' because miners solve complex algorithms and are rewarded for validating those transactions and providing to the network. However, with XRP this was different. Instead of miners receiving the coins, the founders decided that they wanted all the coins. Thus, before XRP was released, the founders created all the coins in the very first block and had them in their own personal wallets. This was a total of the entire supply of XRP which was 100 billion.The second decision made was that the founders began giving away extremely small amount of the XRP token in giveaways and to people interested in the project to promote it. Shortly after these small giveaways, a company called 'Ripple Labs' was created by the XRP Founders. (The company has had some name changes throughout the years, but Ripple Labs is the final name that was accepted). Ripple Labs is centralized company, and the purpose of this company was to develop the Ripple Payment Protocol, and the exchange network. The founders of Ripple Labs were the same individuals who founded XRP. To develop the payment protocol, Ripple Labs needed XRP to work with. The only people in the world who owned a good portion of XRP were the founders. So, what did the founders do? Well, they gifted 80% of the entire supply of XRP to Ripple Labs, and they kept the other 20% of the supply to themselves. The 80% of XRP that was gifted to Ripple Labs was put in an Escrow account. Now with the Escrow account, Ripple Labs can sell a total of 1 billion XRP tokens every month onto the open market. If they choose not to sell the entire 1 billion tokens, they can lock it back up in the escrow for selling at a different time.Why is this significant? Well, because the supply has always been centralized and will continue to be centralized until Ripple Labs is done selling. So far Jed McCaleb (one of the founders of XRP and Ripple Labs) has dumped his entire position. However around 50% of the supply is still owned by Ripple Labs in their escrow account. Essentially, what the founders of XRP did was develop a currency. They then created the entire supply of that currency out of thin air and sold it to the public for real money. This is exactly what the SEC and the class action lawsuits against Ripple Labs believe as well. Jed McCaleb at one time owned 10% of the entire supply of XRP. Since then, he has sold it all. Ripple Labs at one time owned 80% of the entire supply, and since then, has dumped 30% of their entire position throughout these years.Okay, well this means that the supply is centralized. However, XRP is not Proof of Work, and it's not Proof of Stake which means that the XRP Ledger is not centralized by any means. The Ledger has many different validators from all the world. Ripple Labs only owns a handful. So, at least the ledger is fully decentralized. However, Ripple and XRP investors want people to believe that the supply being centralized doesn't affect how the ledger runs and operates. But, this is only partially true. If every month there is selling pressure from Ripple Labs onto the open market, it means that more and more people are going to have to purchase the XRP to keep the price up. This may not directly affect the ledger, but it brings a certain type of volatility to the XRP token in sustaining it's price. How are banks supposed to manage a bridge currency that is extremely volatile? So what is the solution to this? The solution is that banks won't be buying the XRP from the open market like you or I would be. The banks buy the XRP directly from Ripple Labs holdings. By doing this, it plays no part in the valuation of XRP on the open market. Simply, the banks will buy some of Ripple Labs holdings, use it, and eventually sell it back to Ripple Labs, or onto the open market. Then the process continues.Lastly, Ripple Labs has a few different products and services which they offer. Perhaps the most popular and well known is the Ripple Net Accelerator Program. This program was created by Ripple Labs to incorporate an easier cross-border payment solution. However, currently Ripple Labs is not making enough money from selling their program. Ripple Labs main source of income on their income statement is from the sales of their XRP tokens. So, you may be asking yourself, why aren't they making enough money from this awesome technology that will change the world one day? Well, it's because companies don't really need it and they aren't actually using the XRP token for much of anything. In fact, Ripple Labs has had to pay companies like Santander, American Express, and Western Union to even use the Ripple Net Accelerator Program. The worst part of this entire scenario is that even if these companies full on incorporated The Ripple Net Accelerator Program into their business, there would still be no benefit to using XRP as the token for cross border payments. There are thousands of other tokens which can do the same exact thing faster, and even cheaper.Here is the CEO of Western Union saying:XRP Isn’t Making Western Union’s Payments CheaperIf you still don't believe me, please look at the institutional demand of XRP over the last few years. Institutions have been decreasing their exposure to XRP on a yearly basis even before the SEC lawsuit was filed.GrayscaleXRP too CentralizedFinally, if you could create your own money out of thin air and trade your money for the real money by selling it to investors, would you do it? Because that is what XRP is. The founders made a currency out of thin air, and are now selling that currency to investors for real money to fund Ripple Labs. Ripple Labs has no net positive income from their programs and products. The only thing sustaining the business is the sale of XRP tokens to retail investors.
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