History Of XRP
The beginnings of Ripple and XRP tokens was founded by Jed McCaleb and Chris Larson. Mr. McCallum has been responsible for managing the great majority of Bitcoin trades around the world. He has since sold the Bitcoin exchange to Mark Karpeles and then founded OpenCoin. Chris Larson had helped to start the company E-LOAN and most everyone associated with Ripple has substantial experience with Bitcoin. Here we will take a look at the history of XRP.
The Rise Of A Tech Giant
Although it is common to think about the rise of huge companies like Amazon and Google it is not something that happens every day. Apple, Alibaba, and Facebook are also behemoths that have enjoyed enormous success but they still represent the minority. Ripple (XRP) saw an amazing 52,000% rise in value from 2017 to 2018. This represented well over three hundred billion dollars which meant that it was at the same level as the other behemoths mentioned above. Chris Larson, which as mentioned above, is one of the co-founders and maintains 17% ownership which means his net worth is approximately fifty billion dollars.
The idea for this company can trace its way all the way back to 2004 with a company called RipplePay. The idea for this company was to create a network that could potentially replace the need for banks. The basic premise of RipplePay was that banks essentially receive and then make loans. An example of this would be when a customer deposits money into the bank they are simply loaning that money to the institution. The bank will then loan the money out to someone else. From the perspective of the founders of that company, if one person paid money to another person it was simply an update being made within the system.
The person who started the company RipplePay believed that a network could be more efficient for most of these transactions. The updates could be simplified as long as a system could be created that would be capable of understanding the relationship between the recipient and the payer. The founder of this protocol largely ran from its beginning in 2004 through 2012.
In 2011 Bitcoin was strongly on the scene and this lead to a larger demographic having a need for this type of system. One of the founders of XRP had founded Bitcoin exchange which he later sold to Mark Karpeles. Mr. McCaleb then joins Ripple and later hires Chris Larson who is now considered a co-founder. Between 2012 and 2015 the era of OpenCoin began. In the late 1990s Mr. Larson had taken his E-LOAN company public and consequently sold it and then founded the company Prosper Marketplace which was also a peer-to-peer lending company and he chose to leave that to join Ripple.
Because Bitcoin had become so successful, the company decided to allow its platform to take those payments. This meant launching the Ripple Gateway structure. Many people within the industry found that the average person simply didn’t trust the peer-to-peer structure and this is why Ripple went with forming gateways. These gateways allowed for users to go through big businesses they trusted. They looked at it as a hybrid system that was a compromise between peer-to-peer platforms and traditional banking.
What Exactly Is Ripple?
It is a crypto-currency platform that makes it possible for different currencies to be used easily in financial transactions. This means that if two users want to make a transaction using fiat to fiat, crypto to crypto, or a mix of these, they can do so. Ripple and XRP technology make these types of transactions not only easy but also quick. With other platforms, you have to exchange the cryptocurrency for services or goods or for other types of traditional currency. Through this system, you are able to simply convert one currency to another.
This means that it isn’t any longer necessary for miners to use a central exchange when making the conversion. It also means that large banking institutions can use this system to send payments to a variety of networks all over the world. Financial institutions can now easily send payments of any size around the world faster and at a substantially lower cost. The company has made good use of mechanisms that reduce the cost of staff as well as allowing for two parties to use digital currencies of any kind around the world completely free.
The Launch Of XRP Tokens
The company first released its coins in 2013. Similar to Bitcoin it is based on cryptographic signatures and did not initially rely on the gateway platform. These coins could be sent from one user to another without any counterparty or gateway risk. At the time some critics said that this token may not be a necessary part of the network.
Later in 2013, the company received over a million and a half dollars in funding from some of the world’s biggest venture capitalist. McCaleb decided to leave at some point between mid-2013 and the spring of 2014. It’s not a topic that is discussed much but there is some indication that he chose to leave when Stefan Thomas became CTO. It is not completely clear why he left but it is largely assumed that there were some disagreements around strategy and he made the choice to leave the company and founded another called Stellar.
Ripple introduced a feature called ‘balance freeze’ in the summer of 2014. This feature allowed the company to confiscate or freeze coins within its Gateway. This allowed the company to comply with regulatory requirements and made it possible to comply with court orders that demanded the convocation of funds. In the spring of 2015, the company was fined almost three-quarters of a million dollars for violating some banking laws that were in place. There were some additional requirements the company had to agree to as a consequence of being found guilty of this violation.
More Funding Raised
In the fall of 2016, the company was given another 55 million dollars buy a Japanese company. The Japanese holding company was able to acquire 10 and a half percent of the company. The Japanese company and Ripple also created a joint venture of which 40% is owned by Ripple. This and other factors have allowed the company to remain strong.
One concern was around the departure of McCaleb. Some were worried that if he suddenly dumped his shares into the open marketplace that it would significantly reduce the price. To prevent this from happening an agreement was made that limited the amount of sales per week that he could sell all his shares during the first year. There were further agreements as to what he could do over the second, third, and fourth years as well. This agreement seems to have quailed any concerns over the stock prices plummeting.
Some investors felt that when Jed McCaleb left the company it went in a different direction that was less favorable. These investors felt Jed had the right vision for the company now say they have less confidence in the overall management of it. Even so, there are those within the company that say that these types of comments are false and even defamatory.
The Consensus Process
As would be expected this technology has gone through a number of iterations. One of the core aspects of marketing is the consensus process. This is where servers make proposals and nodes except them if the right conditions are met. As long as an 80% threshold is made then the node considers this final. Decentralization used makes the overall system easier and more efficient as well as cheaper and faster. Some do feel, however, that the marketing used by the company is somewhat misleading.
Those that defend Ripple say that the customization can be edited and the type of keys can be whatever someone wants. This means that they’re advertising isn’t mis-representative. The other side of this argument is that there isn’t any evidence that it can be manually changed.
Although the consensus process is considered centralized it’s still possible that nodes can validate transaction data. This means that it can provide necessary assurance even though there are some computational inefficiencies. There are instances where the user notes could reject a transaction and this helps keep the server honest.
As would be expected, a company that has had the mammoth growth rate of this one would experience some growing pains. There’s always going to be some disputes and a fight for control over the direction but the ones found within this company are not especially unique. the company has managed to centralize its system which is made it resistant to censorship. It has a strong capital base and has proven itself and being effective in marketing and developing business partnerships.
There’s good reason to believe that this is a company that’s going to continue to see success. The very fact that a number of critics for Bitcoin are not saying anything about this company is interesting. Within the world of cryptocurrency, this is a company that is likely to continue being a major player.
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