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Ripple or not to Ripple? ‘Definitely not’ says a research report

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Ripple XRP

The following Q&A is not an endorsement; claims made in the Q&A are not independently verified.

We at CryptoTapas endured a lot of heckle and resistance when we published an article on Ripple titled “Why we do not support nor invest in Ripple.”

In that article, we went through the Emotional, Practical, and Crypto-technical reasons why we do not support Ripple. We also included a few outlandish possibilities of why Ripple might win.

While our opinions were clearly laid out – it did not stop the Ripple community from mocking our stance.

Looks like more and more people who actually do know something about this space are now coming out and speaking their minds before another Mt. Gox incident ruins the crypto space.

Demelza Hays, 30 under 30 Forbes Europe awardee and the writer of Crypto Research Report has released a report, warning investors about Ripple crypto.

The report starts with an outline of the players behind Ripple and Ripple labs, including the connection with Jed McCaleb of Mt. Gox to Ripple and how the company is simply liquidating the XRP coins it controls each month to generate revenue in 100s of millions of dollars out of thin air.

Crypto Research Report Download

Download the Report Here

The report talks about how Ripple is one of the most centralized crypto projects ever created. In fact, the report discloses that a mere 100 active accounts hold 97% of Ripple coins. You are talking about billions of dollars’ worth of Ripple sitting in under 100 active accounts; that is probably more centralized than traditional bank accounts of any company, in our view.

The contents of this report are quite revealing, and we asked Demelza to help us with a few questions of our own. She graciously agreed. Below are the responses from Demelza to our questions.

CryptoTapas: Tell us a bit about yourself; what efforts placed you in the 30 under 30 Europe?

Demelza:
I worked for the US Department of State in Punjab for two years, then I moved to France where I did my Master’s in Economics at the Toulouse School of Economics, and then I started my Ph.D. in Business Economics at the University of Liechtenstein. My doctoral supervisor, Professor Dr. Andrei Kirilenko, is currently at Cambridge University, and he is the former Chief Economist of one of the regulatory agencies in the US called the Commodities Futures Trading Commission. I have been publishing papers and researching cryptocurrencies since 2013.

Demelza Hays

Demelza is the editor of the Crypto Research Report, which is a quarterly report available for free in German and English. She is also a fund manager of a regulated cryptocurrency fund for professional investors at Incrementum AG in Liechtenstein.


I started my first crypto business in 2014, where I was buying and selling cryptocurrencies in France. Unfortunately, my partner in the business had a knife pulled on him, and we had 40 of our Bitcoin stolen in Rotterdam in the Netherlands when we were doing a cash trade with someone we met from Localbitcoins.com when they still had the local cash feature on their website, which they recently got rid of because of Know-Your-Customer and Anti-Money Laundering compliance.

It was a tough loss of 40 Bitcoin as that was all of my savings. Unfortunately, I still haven’t fully recovered my Bitcoin stash. I learned my lesson regarding cash trades in a hard way. After that in 2015, I decided to go ahead and make a Bitcoin ATM business because that’s the same as me buying and selling crypto to people in-person except I don’t need to be in-person – there is a machine instead.

Out of the blue, I just sent an email to the regulators in Liechtenstein, and I asked them if I could meet with them to discuss my business idea. I met with them in February of 2015, and my partner and I were the first people to present Bitcoin and crypto to them in-person. They accepted our proposal for a Bitcoin ATM, and we got to work on founding a business.

We named the business “Blockchain Büro” because Büro means office in German. It’s still in operation today, but we do not have any Bitcoin ATMs anymore. We do mostly government consulting and advising banks. We built a distributed ledger points system for green carpooling for the Amt für Umwelt in Liechtenstein, which translates to Bureau of Environment two years ago to name an example. My partner in business, Philipp Büchel, runs the Büro and he is from Liechtenstein, and he helps people who are interested in doing crypto business in Liechtenstein get started with the right contacts.

On the other hand, the University of Liechtenstein asked me to develop a class on the topic of cryptocurrencies in 2016, which I began teaching in 2017, and I have been teaching it every year since. I also teach other courses at the University, like corporate finance and principles of finance.

In 2017, I joined Incrementum AG, which is a licensed wealth management firm that has 6 funds and $100 million in assets under management. I’m actually in the process of becoming a shareholder this quarter. We are launching a regulated cryptocurrency fund for professional investors this year, August 16th. The fund invests in physical gold and cryptocurrencies because we do not think the current monetary system is sustainable. People will increasingly turn to hard assets over the next couple of decades. When they do, they will choose between Gold and Digital Gold. If the price of gold becomes too high, then people will buy gold substitutes like Bitcoin. On the other hand, if Bitcoin’s price becomes too high, then people will buy Bitcoin substitutes like gold. Our fund arbitrages between these two asset classes.

CryptoTapas: What methodology and effort goes into your research pieces?

Demelza:
We use two main methods: logical deduction and empiricism. We study the fundamentals in order to understand what coins to invest in, and then we use data in order to understand at what time to make the positions and at what time to close the positions.

CryptoTapas: You quoted Bloomberg quotation in the report that states that XRP could be considered a security; What particular attributes could support XRP as security rather than utility token?

Demelza:
My doctoral supervisor’s boss, Gary Gensler, is the former chairman of the CFTC, and he is the one that said XRP is a security. The reason XRP is a security is because of the Howey Test used by the Securities Exchange Commission in the US. One criterion of the Howey Test is that a third party is responsible for generating profits on the investment. In XRP’s case, the third party is Ripple Labs Inc. because they are the only group driving the adoption of XRP. This is the main reason why Ripple Labs Inc. is now claiming that they did not make XRP. On the other hand, Commissioner Hinman of the SEC said Bitcoin is not a security because no third party is responsible for making Bitcoin’s price go up. 

CryptoTapas UPDATE: While we were in the process of getting information from Demelza, there has been a new development with Ripple/XRP. An updated complaint was lodged in United States District Court, Northern District of California, Oakland Division, referring to the SEC guidance on what constitutes a security. 

This aligns and strengthens the comments provided above.

The complaint also alludes to California’s advertising laws, claiming that the investors were ‘misled.’ In our opinion, nothing will come out of these appeals, probably a hefty fine to get things wrapped up while the company moves on to print another $300 Million in a month. 

CryptoTapas: Even after 16 court cases, Ripple continues to hold its top position in the crypto space. Do you think this has to do with their almost unlimited cash supply and buying power they hold in the media?

Demelza:
Yes, it also has to do with their market makers. They are willing to lend XRP to market makers at zero cost, which allows market makers to add millions in revenue to their bottom line. To manage XRP’s volatility, professional market makers ensure that sell walls in XRP order books on cryptocurrency exchanges are reduced when good news are released and buy walls in the order books are built-up when bad news are released. This makes XRP less volatile than other cryptocurrencies that do not have professional market makers.

CryptoTapas: The true spirit behind Blockchain and Bitcoin is to change the existing banking and financial system. When the blockchain vision comes to fruition, banks and financial institutions power could be undermined. In such a scenario, do you think Ripple will have any relevance?

Demelza:

No.

XRP will not have any relevance.

I am 100% convinced that Ripple team is selling security tokens to retail investors.

XRP (Ripple, Inc.), Libra (Facebook, Inc.), Apple Pay, Google Pay, and JP Morgan Coin are competing for the same goal: They want to become a global currency.

First, XRP does not have access to Facebook’s network of 1.7 billion users. Second, Facebook’s Libra is intended to have a stable purchasing power, which is absolutely required in order to gain adoption as a medium of exchange and unit of account. Libra will be backed by reserve assets, such as fiat currency and government bonds, and should, therefore, be able to maintain low volatility. In contrast, XRP is backed by nothing.

The price of XRP is based purely on speculation.

The main point is that if XRP were able to back their currency with financial assets and stabilize the purchasing power of the currency, then that would mean XRP coins should have no price appreciation. In fact, only the equity shares of Ripple Labs would profit from XRP’s adoption as a global reserve currency. But Ripple Labs is a privately held company. After fully understanding what XRP is, one realizes that XRP’s investment pitch does not make sense at all.

CryptoTapas: Do you think Ripple uses the vast supply of cash at its disposal to manipulate mainstream media?

Demelza:
One cannot be sure who pays at the end of the day, but someone with financial interest has paid for thousands of fake Twitter accounts to be made in order to shill XRP on retail investors. If you read the article, you can read about how easy it is to see that the accounts are fake computer bots that just retweet XRP hype. For example, Twitter suspended and banned many accounts for being fake bots after the bots posted on Demelza’s post, including accounts such as @ceramika74, @de7erv, @XRPBOSS77, and @YassinMobarak.

Ripple Labs, Inc. definitely paid a lot of developers with XRP; in fact, up to 50,000 XRP per developer in order to test RippleNet. Some developers received multiple payments over time. David Schwartz and Joel Katz even disclose on Twitter that they pay people to attend events.

Twitter ripple news

CryptoTapas: What in your view could be one reason why Ripple might succeed?

Demelza:
Every country has a central bank, and central banks are 100-year pump and dump schemes. Central Banks play the same game as Ripple Labs Inc. just on a longer time horizon and with fancier buildings. Dollars, pounds, euros, rupees, XRP; they’re all fiat scams in varying proportions. If Ripple is smart by getting enough important people on their payroll, then XRP could definitely succeed.

CryptoTapas: What happens if SEC does declare that XRP is in fact a security?

Demelza:
They will fine Ripple Labs, Inc. with securities fraud and make them pay a fine, which will be very small compared to how much the team has made by merely printing XRP. The team can walk out with billions but be forced to stop selling XRP to retail clients at that point. It’s actually a great “exit” plan because they can blame the regulators for making the project fail.

Thank you for your insights, Demelza.

It is not just Demelza or us that hold the opinion of Ripple becoming obsolete (unless they change their service offering completely), here is what Julian Villaverde, a senior crypto analyst at Weiss Ratings, has to say about Ripple in explaining how Government-issued digital currency could severely undermine Ripple’s success as a company to Cointelegraph:

“The reality is the traditional financial system is based on trust and reputation. But for most institutional participants, Ripple — as any other newcomer — lacks in both. If the Federal Reserve upgrades its systems to mimic some of the utility of RippleNet, this would severely undermine Ripple’s future chance of success. Our view with Ripple has long been that they need to pivot away from catering strictly to financial institutions and focus more on providing financial products and services directly to the public.”

Another piece of the puzzle is that since XRP (and Ripple Labs) are not decentralized, they could face the existential issue if (and when) a legal proceeding takes place against them.

What holds in XRP and Ripple’s future is something we just have to wait and watch.

______________________________________________________________________________

Original Image Source: “Ripple coin with smoke on white background” by wuestenigel is licensed under CC BY 2.0  Creative Commons
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About the author

RK Reddy holds two Masters degrees, one in Accounting and another in Business Administration with over 15 years of experience in the financial services industry.

RK Reddy is an ardent fan of Blockchain and Cryptocurrencies. You can see the excitement about this new blockchain technology in every article on Cryptotapas.com. Sometimes this excitement leads to an overly optimistic view. Guilty as charged. RK Reddy says what may seem like an ‘overly optimistic expectation’ today may become an everyday norm in 5-10 years; look at the history of cars or airplanes, Blockchain and Cryptocurrencies belong to a similar frame of reference.”  Of course, that is just his opinion.

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All Roads Lead to $100K Bitcoin: Various Perspectives that Support $100K BTC

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Bitcoin to 100K

Bitcoin to 100K

There are a lot of theories in the crypto space that argue that Bitcoin will reach $100,000 before the next halving.  Some even argue that we could reach that price point before the end of 2021.

Here we have compiled a few perspectives that support a higher price point for Bitcoin.

IF we missed any, please let us know and we will be glad to add it for others to read.

Bitcoin’s ability to reward savers

If you saved $100,000 throughout 2017, today its value would have been $94,000, a total loss of 6% due to inflation. That is without considering the fees and hidden charges that institutes charge.

Even if you invested in the S&P 500 for 12 months at $8333 each month throughout 2017, your portfolio value today would have been $110,000.

If you saved $100,000 in Bitcoin throughout the 2017 (prices ranged from $920 through $14,000 during Jan 2017 through December 2017).  For the purposes of this comparison we are using the last week prices from each month as available on Coinmarketcap historical snapshots.

$100,000 invested in equal amounts throughout 2017 would look something like this.

Bitcoin to 100K

Since 2017, Bitcoin price has crashed and rebounded.  At the lowest point of the crash of $3000 per bitcoin, your portfolio value would have been $144,000.

In today’s average price of $16000 per bitcoin, your $100,000 savings would have been worth $770,000.

Due to its increasing demand and reducing supply, Bitcoin is expected to reach $100,000 in the next 4 years. Some models show that bitcoin will be worth $1 Million by 2030.

Only time will tell us whether bitcoin reaches these prices or not, but point being, no other asset of any class has crazy growth predictions like Bitcoin has.

Stock-to-flow ratio

According to Plan B, Gold had the highest stock-to-flow (SF) ratio of 62.  That is, it will take 62 years to produce the gold that is currently in the market.  In other words, you cannot willy-nilly inflate the supply in a year or two due to how scarce gold is and how difficult it is to find and mine it.

Current SF for Bitcoin is 25, however, by the end of 2020 or 2021, this could jump to 50.  By the next halving in 2024, Bitcoin could surpass the SF of gold.

According to Plan B, “The predicted market value for bitcoin after May 2020 halving is $1trn, which translates in a bitcoin price of $55,000. That is quite spectacular. I guess time will tell and we will probably know one or two years after the halving, in 2020 or 2021. A great out of sample test of this hypothesis and model.”

However, following the trajectory of Plan B’s SF analysis, Bitcoin could easily reach $1 Million dollars by 2030, according to some commenters.

Stimulus and unlimited printing of fiat

COVID has exposed another flaw in the fiat system.  It is that governments can print as much money as they wish whenever they wish to do so.

Whenever governments resort to simply print money without having a basis in asset value or growth in GDP, it erodes the value of the fiat in circulation.

This is what happened to Argentina, Venezuela, Zimbabwe and more.  

The US dollar has lost over 99.97% value since 1900.  For instance, whatever you could buy with $1 in 1900 will need $31 today.

COVID has added salt to the wound for fiat.  It exposed the blatant fact that governments can and will print money to their whim without regard to the inflation and impact on savers.

This increased supply in fiat helps stock market and market liquidity which in itself helps people who are invested in the stock market and other vehicles which is generally the wealthier part of the society.

Other factors strengthening the crazy Bitcoin price predictions

  • Institutional FOMO, for instance, Square, PayPal, Grayscale, etc., entering the market
  • Easier onboarding of new retail investors
  • Greater technologies and DApps being built on Bitcoin 
  • Great DeFi services to lend and borrow money
  • Globally accepted single denomination that does not need to be converted in the future (with enough places accepting bitcoin)

What other factors do you think will contribute to Bitcoin’s shooting past the $100,000 barrier?

Let the FOMO begin…

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.

 

Continue Reading

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Crypto Roundup: All Your YouTube Influencers in One Place

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Crypto Roundup

Visit our Crypto Roundup section daily for a dose of all your favorite Crypto YouTube influencers in one place.    

Worried about missing updates from your favorite YouTube crypto influencers?  

Welcome to the Crypto Roundup.  

On this page, we will post a quick summary of the videos from some of the most popular YouTube crypto influencers.

Ivan on Tech  Altcoin Daily

Crypto Zombie Box Mining

Ellio Trades Lark Davis

Data Dash Bitboy Crypto

MMCrypto Chico Crypto

Altcoin Daily

Video title: Bitcoin Will Be OVER $20,000 By Christmas 2020! BIGGEST WEALTH SHIFT OF OUR LIFETIME! Cryptocurrency

Date: 19-Nov-20

  • World’s biggest wealth shift of our lifetime is happening right now and no mainstream media is talking about it, except CNBC.

  • Preston Pysh predicted on August 26th that: “Bitcoin should be reaching its all time high by Christmas.”

  • If you are looking to buy a dip, there may not be one.
  • Ricardo Salinas Pliego, a mexican billionaire, has just revealed that 10% of his liquid assets are into bitcoin.

Lark Davis

Video Title: STOCKS HIT NEW HIGHS! WILL COVID VACCINES LEAD TO MEGA PUMP IN 2021? [Are You Ready?]

Date: 19-Nov-2020

  • Stock markets and bitcoin pumps higher on the news of the second successful covid vaccine.
  • There could be more chances for the new stimulus. Means more inflation, more debt and simultaneously pumps stocks, gold and bitcoin.

Crypto Zombie

Video Title: BITCOIN $18.5k TOP!!?! DON’T BE FOOLED!! HODL FOMO BEGINS!!! $TRILLIONS FLOOD!!

Date: 18-Nov-2020

  • Overall sentiment of Bitcoin has changed drastically from ICO craze in 2017 to a time where people are FOMOing to own more bitcoin.

Ivan on tech 

Video Title: BIG WARNING TO ALL HODLERS!!!!!!!!! DO NOT GET REKT!!! BITCOIN $18,500 REJECTED – NOW WHAT?

Date: 18-Nov-2020

  • Ivan expects bitcoin to shoot past $20K resistance before end of this year, giving it 85% probability

Chico Crypto

Video Title: World’s Most Powerful Turn BULLISH on BITCOIN

Date: 19-Nov-2020

  • All those who hold big bags of Bitcoin will come out of the shadows to talk up the Bitcoin rally, a $20K bitcoin could be on the cards before the end of this year
  • Ethereum mining could act as a big catalyst for Ethereum’s price
  • Big companies like google could play a bigger role in mass adoption of crypto

Let the FOMO begin…

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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Lessons from the Veteran HODLERS to the Newbies!

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Lessons in Crypto

For all those who entered the crypto market after the 2017 bull run – here are few lessons from the HODLERS from the last bull run(s).

This is our attempt at making all you newbies aware of the mistakes veteran cryptoers did.

Let’s get started…

Don’t FOMO in to all the hype

FomoIt’s hard not to FOMO in crypto.  The trick is to make sure you don’t lose your shirt in crazy bets.  Always limit your bets to what you are comfortable losing.

The common ways you can become victim of FOMO are:

  • Following your favorite YouTuber without actually doing your own research on the project.
  • Investing into projects at the top.
  • Believing in promises of 100x or 1000x without any substance behind those claims.

HODLing far too long

Remember why you are into crypto – to make the money.

Never fall in love with your crypto, and HODL the tokens even when they are 10x and more.

Have a strategy to take your capital out before you become a HODLer.  

If you believe the project really has what it takes to go beyond 100x and more, just sell in instalments so as to not miss the ride.

One of the best ways to HODL is to take your capital in full and profit in tranches.

This rekt story will give you a right perspective of what it looks like, it’s one of many:

Don’t put all your eggs in one basket

Never go all in on one project. No matter how strong the project may look, even the projects with strong fundamentals don’t do well sometimes. 

And, you will be kicking yourself watching other projects go up and your portfolio just doesn’t seem to make a move.

And don’t over do it and have a portfolio with over 100 projects either. It is very difficult not to have invested in more than 15 projects but anything less than 20 is a good way to go, in our opinion. 

Put aside the share of Profits for Taxes.

One way you can get a good night’s sleep is by paying taxes. 

Always keep a habit of putting aside a % of your profits in USDT or other stable coins, as a reserve to take advantage of market volatility and also to meet your tax obligations. 

Exchanges are more evil during bull run

Foreign ExchangesDon’t trust exchanges. Yes we already know that, but they play more games during bullrun, some intentional and some technical. 

Many exchanges tend to go under maintenance when the prices shoot up too high too soon (Coinbase?), and you can’t sell. 

And the shady exchanges scam out before you know.

Regulators seem interested when the market cap of these projects goes through the roof, which then adds FUD around the project crashing the prices.  

Exchange may freeze funds pending investigations when such issues arise.

Take for example OKEx. Users are unable to withdraw their assets from the exchange for almost a month now, not certain if they ever will, and all that started with the legal dispute.

Never fall for Arbitrage gains

Arbitrage is when you buy in one exchange at a lower rate and sell on the other for a higher rate to take some profits. 

Some shady exchanges show a lot higher prices than the other genuine exchanges and when you deposit your assets to sell at those prices there won’t be actual volume to execute the trade. You may be stuck with either a high fee for withdrawal or other funky rules to take your own money out. 

Remember, there is no free Giveaway

Free CryptoScammers rise with the rising market.  

When the crypto market buzzes with all time highs – scammers cash in big time on newbies.

The most lucrative scam in crypto is ‘Free Giveaway’. Whether it be through YouYube ads or discussion groups and wherever they can get your attention.  Read this article on various sophisticated scams that are being deployed.

We hope these lessons help you through your trades and crypto life.  Stay safe and always DYOR.

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.

 

Continue Reading

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