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Why is Facebook’s Libra better than Ripple?

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Facebook Libra vs XRP

OK, first things first. 

We are not big fans of both Ripple and Facebook’s Libra. So this entire article might be completely biased and just a ranting opinion. Also, we will be using Ripple and XRP interchangeably, don’t get too technical on us. If some of the questions posed below sound like accusations, they are not, they are opinions. You have been warned.

We don’t like Ripple because it ‘mints’ millions of dollars in money out of thin air and NOT earn it by providing service (not yet and not enough to justify millions of minting each month)…and because they have almost unlimited supply of money they get a lot of coverage on primetime, in our opinion. This coverage in turn brings more ‘users’.  

We think that the curtain is lifting as more than 63% of hardcore Ripple fans left the ‘fan club’.  

Now, Ripple is still popular. I mean, if you have a billion dollars (or more during the peak) every quarter for doing nothing, wouldn’t you be on the top of the charts?

As you can see, we start ranting every time we talk about Ripple

Some might call this baseless, might be.  

We just don’t like deeply centralized projects that call themselves cryptocurrency. If they had called themselves Ripple Digital or something else and did not trade as a crypto – we would have cared less.  

Again, we digress.

Coming back to the topic at hand, here is why we think Libra is better than Ripple, again mind you – we do not like them both.

Pegged to fiat in case sh*t hits the fan

Many consider fiat to be a dying breed. I think even Feds agree, that’s why they are shifting to a Digital Dollar. Libra is pegged to world fiat, that means, every Libra token is backed by some value, so theoretically, Libra will have a stable coin value.

Ripple just prints money each month. Just like that. No rules – no reasons – no nothing. They minted 100 Billion (yes, Billion with a B) initially and now have about 55 Billion locked in Escrow that automatically releases 1 Billion tokens each month. That is close to $200 Million in value created for ‘doing nothing’. Any company in the real world would have to hire 10s of thousands of people and create real value for the world to generate that kind of income.

Even the company that we don’t like, Facebook, actually provides a service to the public. 

Volatility 

Facebook’s Libra will be a stable coin, that means, there is some kind of guarantee that the value will hold when transacting.  

Ripple on the other hand is volatile. In fact, it lost 95% of its value from the peak. A volatile cryptocurrency is not best suited for international transfers/money transfer services, etc.,  

Introduction of digital dollar

Once the US government issues the US Digital Dollar – people would rather trust government issued dollars that are digital over any company minted currency that is volatile.

Libra intends to peg with digital dollars, as such, the introduction of digital dollar may not impact Libra.  There is a rumor that Facebook’s Libra will be the Trojan horse that takes the US dollar onto global retail platforms (so far it was handled majorly by institutions and governments as global reserve).

Libra project needs Libra coin, Ripple Tech doesn’t need XRP

facebook libraYou do not need an XRP coin to use Ripple Technology. The only reason XRP was believed to have liquidity is because it is easier to transfer XRP for XRP and then convert that in local fiat for almost zero cost.  This works only when XRP is somewhat stable. If it is volatile, the company (as in Ripple) might have to cover the ‘difference’.  Since they mint millions (and billions) out of thin air – they may even pay to stay in business, after all it’s all free money?

Facebook’s Libra project actually needs Libra coin to work. It will be the basis of transfer of value over their messaging app.  You could theoretically send money through text message and your fiat will transfer into the recipient’s account in their local fiat currency in real time.  When this happens – will we need money transfer companies? If we will not need money transfer companies – what will be the value proposition of XRP which is targeting money transfer/cross border payments primarily?  

Thinking that money transfer companies will always be around is like betting on calling card businesses when WhatsApp is in the market. 

Ripple’s Tech is far from blockchain spirit 

Ripple uses a novel consensus algorithm that “gives Ripple a large measure of control over XRP’s inner workings, which has led many to argue that it’s not truly decentralized. In that sense at least, XRP is a “really bad” cryptocurrency.” That quoted sentence is lifted from MIT Review.  

Facebook’s Libra actually uses a blockchain system that is somewhat consensus basis (at least from the participating members, it is still centralized in a way, but there are plans to open Libra as a public blockchain). They even introduced their own language to work with the blockchain system.

Transparency: Show me your books, please!

Facebook is a public company. They have to disclose their financials each year.  In fact, here are their last financial statements from 2019.  

Now, what happens with the $200 Million dollars (at current market prices) that Ripple releases into the market each month?  Can you show me the records of the spending?  How much did the executives make since inception?  What is the ratio of spending on the project development vs. executive compensation?

Jed McCaleb alone has sold over $175 Million worth of Ripple so far and still has a big chunk in his possession.  What about the other people involved with Ripple, how much of Ripple did they liquidate? How much money was raised so far by liquidating Ripple and how were the funds used?  

The quarterly ‘transparency report’ just shows the ‘total sales’ but doesn’t give any insight into how the funds are ‘used’. Talk about Great transparency.

How much of the sale volume is bots driven?  Are any of these bots controlled by the Ripple team? 

If you remind us that Ripple (or Ripple Labs) is a private company and it doesn’t have to disclose that information, we would say, yes, exactly, and we rest our case on the transparency aspect, which was supposed to be the cornerstone of the whole blockchain movement?  Probably, we got our concepts mixed up.

We will stop here. 

We don’t want to actually start liking Facebook’s Libra just because of the flaws we see in Ripple.  Both are extremely centralized and don’t belong in the cryptosphere, in our opinion.

And, we don’t even know if Facebook’s creator is a human or not!

Curb your Zuckerberg

Sure you are Mark (originally from https://twitter.com/hsuggests/status/920465722962214913)

Note for Ripple fans: Before you tell us how little research went into this article, let us save you some time and energy.  We know, and yes, these are our baseless opinions. If you can articulate the use case of XRP in a world with NO money transfer companies, we want to hear them. We may even change our opinion, just teasing you.

Thank you for reading and sharing this article. Stay safe and healthy!

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We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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CryptoSpace

This is What Non-Bitcoiners Think About Bitcoin

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Bitcoin believers

There are two types of people in this world: Bitcoiners and non-bitcoiners.

Many non-bitcoiners stay that way because they have come to associate Bitcoin with certain elements of the society. 

Here is a short list of things non-bitcoiners associate Bitcoin with and whether these allegations have any validity.

Money laundering

moneyBitcoin is criticised to be used for many illegal activities including money laundering. 

Can Bitcoin be used for money laundering?  Sure.

So can gold or cash or you name it.  

Anything of value can be used for money laundering, however, only one of them can be actually tracked forever.

To many people’s surprise, Bitcoin is the only asset among many that is the worst medium to use for money laundering.

Terrorist funding

Haters say that bitcoin is used by terrorist groups to avoid being tracked. 

Fools be those who think Bitcoin is completely anonymous.  

In fact, physical cash is much more anonymous than any medium of exchange out there.

Drugs

Bitcoin was (is) used to buy and sell drugs. 

Bitcoin did not create a single drug and it did not create commerce for drugs either. The drugs commerce has been in existence before bitcoin.  What bitcoin did was create this false illusion that it is anonymous money.

To the dismay of many those who thought they were being smart have etched their dealings on the blockchain for anyone with the right tools to find out.

Dark web

darkwebYes, the dark web has made Bitcoin popular.

Silk Road, illegal weapons, transferring money without going through banks or other legal entities, all of these have colored Bitcoin as Dark Web money.

However, once people understood the myriad of applications that bitcoin and blockchain can help with, the dark web allegations have faded.

We would scorn anyone suggesting that the internet should be banned because there is illegal stuff going on (dark web lives on the internet too).

However, these very people would call for a ban on Bitcoin without understanding that Bitcoin is the next phase of the internet’s evolution.

Gambling

Gambling cryptocurrencyGamblers love to squander their wealth. And those who dabble with Bitcoin with their life savings are no better than gamblers.

This has some truth because there are no guarantees that Bitcoin will succeed (although one could argue that it has already succeeded in bringing blockchain to the consciousness of mainstream).

As such, those putting money in bitcoin understand that they could lose their investment.

While many invest in bitcoin in the hopes of getting rich, there are few who invest in it to own a piece of technology and be part of the history in the making. 

In that sense, Bitcoin is way different than gambling.

Is Bitcoin the panacea?

While Bitcoin is far better than the existing fiat system, we do not think Bitcoin as the panacea.

We believe that Bitcoin will build bridges and connect the world which was deprived of access to financial inclusion and in doing so it will become part of the world financial ecosystem.

It will not replace the fiat system, rather, it will make it more accessible.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Factors adding gasoline to the Bitcoin shortage fire

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Bitcoin shortage

Bitcoin’s creation and its subsequent proliferation may have all been planned for a long time, this is the outcry of many conspiracy theorists.  

These conspiracy theorists also believe that whistle blowers are mere plants to help prepare the world for what’s coming.

One of their theories is that the end of physical fiat was planned a long time ago, however, the transition of physical fiat to digital fiat needed a catalyst to drive the conversation.

Either by meticulous design or by sheer coincidence – Bitcoin came to life in 2009.

We personally think that Bitcoin was designed by liberals who believed a ‘fair world’ was possible.

The invincibility of this groundbreaking technology meant that the forces that were working on doing away with physical fiat had a runway built for them.

So, the rhetoric has now changed from ‘Bitcoin is for anti-social elements’ to ‘Bitcoin is the currency for the visionaries’.

Why is that backdrop of conspiracies and layout necessary?

Because, irrespective of the underlying reasons the rhetoric has changed and it has changed for good.  This means, as the physical fiat follows the path of extinction, Bitcoin – the king of digital currency, will see a lot of demand.

We were warned a long time back that there will not be enough bitcoin in the world for everyone to buy.

Some studies say that owning .28 Bitcoin will guarantee you a seat in the top 1% bitcoin holders in the world while others say you need 5 bitcoins to claim the top 1% in the Bitcoin rich list.

Point is, even if you have all the fiat in the world, there is a limit on how much bitcoin you can buy.

When people who want to buy bitcoin are ready to pay any price while those who own the fractions of it are unwilling to sell it – the prices have only one way to go: UP.

 

The strategic moves into Bitcoin from MicroStrategy, Square, GrayScale, Fidelity and a host of billionaires who actually know something about money and finance is a tell-tell sign for the rest of the world.

Whether you want to get into Bitcoin to own a piece of technology itself, or to hedge against the inflation, or simply to use it as ‘digital gold’ that you can take with you, any and all of these reasons are good enough to look into Bitcoin.

If you had told us last year that a public limited company will convert its cash reserves into Bitcoin we would have laughed at you, but that is precisely what has happened.

As a result of converting fiat reserves to Bitcoin, the stock price of MicroStrategy saw an immediate boost which was as big as the reserve itself.

Do you think other public companies will stay on the sidelines for long?

When a legend like Paul Tudor Jones says ‘Bitcoin is the fast horse’ to bet on against inflation and he himself invests 2% of his portfolio, how long will it take for other fund managers to take note?

Add to this the demand from retail investors in the form of millennials, who are also set to inherit some $60 Trillion dollars from the baby boomer generation in the coming decade.

Conclusion

We personally think the goldilocks moment for Bitcoin has arrived.  It has the perfect combination of ‘scarce supply’ and ‘growing demand’.  It also has the added elements of adoption and ‘nascentness’ working in its favor.

These factors alone make Bitcoin one of the best investment assets of the century, in our opinion. 

We have been investing in Bitcoin using dollar cost averaging.  We don’t go selling our home or taking on insane loans to invest in bitcoin, rather, we invest $100 here and $100 there.

Before you invest your money into bitcoin or cryptocurrencies, spend some time understanding what Bitcoin is and why it is important in taking the world from the centuries old fiat system to a brand new global currency system.

In our personal view, Bitcoin will become one of the best assets to hold by the next halving.

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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Why this bull run has no precedence? ONE key metric to rule them all

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bull run 2020

Everyone is singing the praises for the bulls’ arrival in the crypto space.

Some say that 2020 will mark the biggest bull run in cryptos’, albeit short, history.  

We are already in October so we doubt any fireworks will take place now since there is a lot of uncertainty about the US elections.

Add the uncertainty around the stimulus bills, unemployment trends, soon to be lifted forbearances and the list goes on.

2020 still has another 2.5 months to go but most of these uncertainties will take a while to show their true impact.

For instance, what will a Biden presidency mean for the economy and cryptos?  

How many people will be forced to sell their homes once the forbearance’s are lifted?

What happens if the next stimulus bill does not pass through?

When will the vaccine become available?

These are some of the unique situations that we have no precedence for. Do not let anyone convince you that we know what’s going to unfold, because no one does.

Yes, everyone has theories, like the ones we are presenting here, but that is all they are: theories.

The BIGGEST metric that crypto community is not considering

We are no economists nor can we run any fancy charts to impress a point on you.  

We are just good observers and have common sense to deduce a few things based on data.  

For instance, between 2007 and 2010 consumer spending dropped by an overall .2% and we know what that meant for the economy.

Personal consumption expenditure

In 2020, people have literally cut down on their spending.  Some of it is forced due to the restrictions imposed by external forces and most of it is self imposed.

I am sure the spending on marijuana, liquor and food have gone up but what about other spending?

2020 also saw a spike in the savings balances.  

Economy is not stimulated by people hoarding their money. People need to exchange value for the economy to thrive.

What happens to the spending behaviors when the true stats around evictions, lost jobs (that are not coming back) and small businesses that are shutting down permanently are out?

Our guess is that people are going to be weary of spending money in the short to medium term. If we were forced to pick a timeline – we would say about 12-16 months (assuming we get a vaccine in Q1 2021).

When is the next bull run? 

Based on what we have seen in 2007 through 2010 and observing the consumer spending habits in recent times, we think that Bitcoin (and cryptos) will not find their true peak until next halving.

We know this is not what you came to hear.  

If the bull run in your mind is hitting the 2017 highs then we do not think you have to wait until the next bull run.

If the bull run means a $100,000 bitcoin then we stand by our opinion on when that is going to be.

A case for bull run

In spite of what is going on in the street, following factors are acting as strong bull market signals for the crypto space. 

Hype: Crypto space (specifically Bitcoin) has been gathering a lot of steam in terms of brand awareness and mass penetration.  This is great for the long game.

Adoption: More than ever, private and public enterprises are becoming serious about bitcoin and underlying blockchain technology.  What is good for bitcoin is good for blockchain and vice-versa.  MicroStrategy investment, Paul Tudor Jones getting involved with bitcoin are some examples.

Tech explosion: Crypto space is home to some of the brilliant minds in the tech space. Add Big Techs interest in the crypto space and you have a perfect recipe for monumental shifts in crypto perception. Tech giants like Microsoft, Google, Twitter, Facebook are all getting involved with blockchain and cryptocurrencies in some shape or form.

Retail demand: More and more retail investors are looking for alternative investments and they are waiting on the sidelines to get involved with Bitcoin.  As soon as companies like Fidelity or other brands offer crypto investment through retirement plans – there would be a massive influx into this space.

DeFi: DeFi in its current state might be infested with shittty projects but as a concept and technological shift to turn the current banking system upside down – it holds great potential. Any demand to DeFi brings more demand to bitcoin, ethereum and blockchain in general.

Conclusion

The debate around when is the next bull run will hinge on how the market recovers from this pandemic. How soon will we get the vaccine and how many of the lost small businesses and jobs are we going to resurrect?

From a macro perspective, Bitcoin and few select cryptocurrencies will continue their upward trajectory so if you looked back to 2020 five years from now, you might think bitcoin was on sale.  

Question is: how many people have that kind of patience?

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

 

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