Crypto - Milestones, gold, tokens or coins?

Crypto, Blockchain and other profitable nonsense

Sep 27, 2024

The world of crypto reaches milestones while being referred to as the new gold despite references to tokens and coins. There are still billions of people, let’s just say most of the planet, that is in the dark about what crypto even is. It has been under the eyes of the SEC for a very long time. Certainly through the duration of the current tenuous Gary Gensler tenure.

The creation of Bitcoin and the XRP Ledger are both considered milestones in the evolution of blockchain technology, each with distinct origins and objectives.

Here’s a brief overview of their backgrounds and creators:

Bitcoin

Creator: Bitcoin was introduced by an anonymous entity known as Satoshi Nakamoto. The true identity of Satoshi remains a mystery, with no one able to definitively pinpoint who or what Satoshi is—a single person or perhaps a group of individuals.

Objective: Bitcoin was created following the 2008 financial crisis, with a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" published in October of that year. The primary goal was to create a decentralized digital currency that would enable peer-to-peer transactions without the need for trusted third parties like banks, which Bitcoin's inventor saw as potentially flawed.

Technology: Bitcoin introduced blockchain as a public ledger for transactions, ensuring transparency and preventing double-spending without a central authority. Its decentralized nature and incentive mechanism via mining distinguish it as the first successful implementation of blockchain technology for currency.

Thanks for reading SMOKE & MIRRORS... and the art of critical thinking! This post is public so feel free to share it.

XRP Ledger

Creators: The XRP Ledger was developed by a trio of tech veterans: Jed McCaleb, Arthur Britto, and David Schwartz, with significant contributions from Chris Larsen who later joined and became one of the key figures in Ripple Labs, the company associated with the XRP Ledger.

Objective: Unlike Bitcoin, the XRP Ledger was designed to facilitate fast, inexpensive, and scalable transactions, targeting the inefficiencies of existing financial systems rather than building a purely decentralized currency. Its focus is more on improving cross-border payment systems and integrating with traditional financial institutions.

Technology: The XRP Ledger uses a consensus protocol as opposed to Bitcoin's proof-of-work algorithm, allowing faster and more energy-efficient transaction validations. The consensus protocol does not rely on mining and thus can process transactions much quicker and at lower cost, which aligns with its focus on high transaction throughput.

Connections and Differences

Purpose: While both Bitcoin and the XRP Ledger operate within the realm of digital currency and blockchain, their core purposes differ. Bitcoin focuses on decentralization and being a store of value, akin to "digital gold." In contrast, XRP and its ledger are more focused on improving traditional banking and payment systems by providing a fast and efficient mechanism for cross-border transactions.

Philosophy: Bitcoin emphasizes decentralization and independence from financial institutions, whereas the XRP Ledger was built with collaboration with banks and financial institutions in mind.

Technology Approach: Bitcoin's mining process is resource-intensive, whereas the XRP Ledger uses a consensus algorithm that is more environmentally friendly and economical in terms of transaction costs and speed.

Overall, both Bitcoin and the XRP Ledger have had significant impacts on the development of the cryptocurrency and blockchain landscapes, each addressing different challenges and opportunities within the financial ecosystem.

Most people within the global financial investment circles now refer to Bitcoin as the new "Gold Replacement".

Bitcoin as Digital Gold:

Bitcoin is often described as "digital gold" due to its properties that mirror those of gold: scarcity, durability, divisibility, and fungibility. Its capped supply of 21 million coins makes it a deflationary asset, attractive as a store of value, especially in times of economic uncertainty or inflation.

Investment Appeal:

Like gold, Bitcoin is seen as a hedge against inflation and a way to preserve wealth. It offers a decentralized alternative to traditional fiat currencies, and its high liquidity has made it a popular investment choice. Institutional investors have flocked to Bitcoin as a way to diversify portfolios, and platforms for trading and holding Bitcoin securely have proliferated.

Challenges and Considerations:

Despite its appeal, Bitcoin is not without challenges. Price volatility can be extreme, posing risks for investors using it as a stable store of value. Additionally, debates continue around its scalability, transaction fees, and environmental concerns due to the energy-intensive mining process.

When I set out to understand the world of crypto I wanted to spend my time on new technology that was not looking to overthrow the current capitalistic paradigm as we know it. Although, there are days when I could certainly sit for hours and discuss this topic. I was more interested in a blockchain technology that had layers of a real world use asset to it. Ripple and XRP are just that and Bitcoin has also become that.

I tend to refer to XRP as a Vehicle for International Transactions. The SEC has agreed after their four year long litigation coming to an end on Oct. 7, 2024, that XRP is not a security. The SEC has even recently apologized for their mischaracterization of XRP therein paving the way for upcoming lawsuits by some institutional investors for the SEC’s role in suppressing the crypto market and the XRP crypto asset in particular.

October 7, 2024, is the deadline that the SEC has to file an Appeal to their current ruling. I have been saying for a long time now that there will be no appeal. Between the current market manipulations, legislation coming down the pipe in Washington D.C., and the past few days of grilling the SEC Chairperson, Gary Gensler, shows me that all of this is simply a pre-orchestrated judicial timeline manipulation in order for the United States, Blackrock, and other international major financial institutional players to position themselves for the upcoming digital transformation from the global fiat centralized petro dollar to a new regulated global fiat decentralized blockchain containing layers of ways of moving financial transaction, contracts, real estate, securities and more efficiently and cheaper than ever before.

XRP's Role:

XRP is designed as an efficient, scalable digital asset specifically aimed at facilitating cross-border payments and financial transactions. Ripple, the company behind XRP, focuses on integrating with banks and financial institutions to streamline international money transfers.

Advantages:

Speed: XRP transactions typically settle in 3 to 5 seconds, far surpassing traditional methods like SWIFT, which can take several days.

Cost: With negligible transaction fees, XRP offers a cost-effective solution for high-volume and micropayment transactions globally.

Scalability: XRP's consensus protocol supports thousands of transactions per second, making it a viable backbone for potentially handling a large share of global payments.

Smart Contracts and Blockchain Usage

Smart Contracts:

The integration of smart contracts into blockchain systems like the XRP Ledger enhances the capability for programmable money and automated digital agreements. Smart contracts enable a wide range of applications, from complex financial instruments to decentralized applications (dApps), ensuring that transaction terms are executed automatically without intermediaries.

Decentralized Fixed Digital Fiat Asset:

A decentralized digital fiat asset on XRP could facilitate stable, borderless transactions pegged to fiat currencies, mitigating volatility while maintaining the benefits of a digital asset. This could be key in leveraging XRP for broader financial applications and adoption in everyday transactions.

Blockchain Usage and Fees

Blockchain Advantages:

Given its decentralized nature, blockchain technology provides transparency, security, and immutability. These features are beneficial in reducing fraud and ensuring accountability across financial systems.

Fair Price Point for XRP:

Determining a fair price for XRP’s current $.59xrp value involves several factors:

Usage and Demand: As more institutions adopt XRP for cross-border transactions and utilize it within smart contracts and dApps, demand must drive the asset's value higher. This is explained in detail by Ripple’s co-founder Chris Larsen. He claims the soft spot for XRP is $10,000xrp. This is based on the current international partners and global transaction contracts and their expectation of monetary traffic using the XRP ledger in the near future beginning in January 2025.

Fee Efficiency: With low transaction costs, XRP has a strong selling point over traditional currency transfer methods, potentially increasing its utilization and enhancing its market value.

Market Positioning: As Ripple continues to expand its network of partners and work with regulatory bodies, XRP's positioning as a legitimate financial instrument could solidify its role and stabilize its market pricing.

Bitcoin's position as a potential gold alternative emphasizes its role as a wealth-preserving instrument, while XRP's design and utility focus on transforming global financial transactions. Integrating blockchain technology and smart contracts can amplify these roles, providing effective solutions for modern financial challenges. As usage increases and the technological ecosystem develops, value propositions for both Bitcoin and XRP could evolve, reflecting their intrinsic and utilitarian values in emerging global economies.