Ripple News Update
Ripple (XRP) prices plunged on Friday morning after a Bloomberg Businessweek report said that banks “have no interest in using XRP.” (Source: “Ripple Wants XRP to Be Bitcoin for Banks. If Only the Banks Wanted It,” Bloomberg Businessweek, January 25, 2018.)
The article, written by Matthew Leising and Edward Robinson, was broadly skeptical of cryptocurrencies but its main thrust was against Ripple and its XRP token. This got a lot of people upset. Some Redditors even took to discrediting Mr. Leising when he appeared on Bloomberg TV looking nervous and fidgety.
Calm down, everyone.
It’s unfair to criticize a journalist for his “looks” or delivery—he’s not a broadcaster.
With that said, I had serious issues with his reporting. It would break my heart if investors walked away from his story with an incorrect perspective on XRP. So let’s break it down…
The article begins with a fairly standard description of XRP’s role within the Ripple ecosystem.
“One rationale for buying XRP is that unlike Bitcoin, the token has one narrowly defined but clearly useful purpose: to help banks move cash from point A to point B faster and more cheaply, especially across borders.”
This is all true. But then Leising and Robinson drop a bombshell.
“Current and former executives at seven global banks—some of whom have partnered with Ripple—say there was scant chance they would ever entrust their corporate clients’ payments to a cryptocurrency.”
Really? It would be fascinating to know who made these statements but Bloomberg has kept their sources anonymous. Some readers may think this shatters their credibility, but it’s actually not the part I have an issue with.
I’m much angrier about what came after.
Shady Sources: Leising/Robinson followed up that statement with a quote from Joseph Lubin, who they refer to as the founder of ConsenSys. You know what else Lubin is? A co-founder of Ethereum, Ripple’s rival for the No. 2 spot behind Bitcoin. Of course he called XRP a “useless” token!
His company is literally running all its products on Ethereum—his fortunes are tied to ETH prices. Is he really an impartial source?
Nominal Figures: The report says that Ripple holds a ton of XRP in an escrow account. True. The report also says that XRP “can be sold only in limited chunks over time to avoid crashing the market.” Also true.
But then it says Ripple sold $185.0 million XRP since September 2016. Where is the context? Did Ripple take up five percent of the market? 10%?
It’s impossible to judge that $185.0 million without knowing the percentage. Only then can you judge if Ripple was manipulating XRP prices or not. As it happens, Ripple only accounted for 0.075% of total XRP sales, down from 0.20% the previous quarter.
Backward-Facing Analysis: The entire tone of the article was grounded in the past or present. It had nothing to do with the future, even though that’s the essence of technology investments. Banks “balked at XRP” according to Leising/Robinson. You don’t say! The same way they “balked” at Bitcoin? Or the same way regulators brushed aside cryptocurrencies in 2015 and 2016?
The entire history of technology is littered with similar examples. Powerful elites dismiss world-changing inventions. Then those inventions eat their lunch. That’s how the world has worked for time immemorial.
Although I understand that journalists cannot operate outside facts, there’s something odd about this story. It does not take technological evolution seriously—it merely accepts the status quo. Why?
Personally, I believe these journalists are competent but too close to the story. They need to widen their lens to see the big picture—cryptocurrencies are here come hell or high water. What’s needed more than anything is a roadway to connect them all. XRP is that roadway.
As such, we maintain our $10.00 Ripple price prediction for 2018.