A report posted on CNBC was an interesting read, so it’s only just that we tackle it here and react to the comments made by Brad Garlinghouse, CEO of Ripple.
In short, the message Garlinghouse was sending across to the masses was that Bitcoin, the leading cryptocurrency by a country mile, may be losing it’s position as the major price influencer of the entire cryptocurrency community. Before we dive into his position, here are some things to know about the background of this talk.
- Prices of cryptocurrencies have been correlated with BTC for a very long time, and this hasn’t changed in the first half of 2018.
- This trend may be ending as investors and markets get a grip on the variances between the many use cases, according to Garlinghouse.
“There’s a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies,” Garlinghouse told CNBC’s “Power Lunch” Wednesday. “It’s early, over time you’ll see a more rational market and behaviors that reflect that.”
Based in San Francisco, Ripple’s network is focused on achieving faster global financial payments. The digital token with the same name, going by symbol XRP, is what’s used by financial institutions to process these transactions so rapidly.
After a record first quarter that featured 20 new production contracts with new organizations, a deal was announced with the largest bank in Kuwait just yesterday. This new deal includes involving companies like MoneyGram that are currently testing XRP for cross-border transactions to satisfy payments.
Despite the successful first quarter, the XRP digital token fell 70% in value and was the worst performing digital currency among the larger coins. While the sector took a nose dive as a whole, bringing down the market cap by over 50 percent, (Source: CoinMarketCap) it’s competition, Bitcoin, lost only 50% over the same three month period.
“It’s still a nascent industry, the speculation in the market dominates the trading activity,” Garlinghouse said. “I think it’s a matter of time until people better understand the different use cases.”
With over 1,500 cryptocurrencies circulating, Garlinghouse also added that 99% of them won’t be around in 10 years. Of course, there are many pump and dump scams that have occurred in the last 12 months which entirely supports this argument, as well as a lack of technology and innovation behind many coins, not to mention lack of use cases.
“There’s gonna be a bit of a correction along the way here where a lot of the players in the space that don’t actually solve a real problem are going to get washed out,” he said.
In the past, we’ve seen the frauds that have happened, one famously involving boxing legend Floyd Mayweather.
Related: Bitcoin Price Index.