I came across this tweet by @Shaughnessy119 a 'Crypto Research Analyst' and I think it's time for a Christmas smackdown.
Tom opens up his list highlighting that there is "Little Use of XRP in Ripple's Products". Further down he says that banks have no interest in XRP anyways because it's ill-suited for several reasons. So why complain if Ripple is trying to design products for its customer base?
Of course, it's quite obvious to me what Ripple is playing at with their x series of products: get people using xCurrent and xVia and then onboard them onto xRapid to leverage XRP for cost savings, completely revamping the way the cross-border payments work in the process.
Tom then drones on about how Ripple is offering incentives to customers. Maybe they are, maybe they aren't. But if they are it's hardly shocking. SaaS vendors in every vertical do that every single day to onboard potential customers.
I won't bother with the "Ripple owns the majority of XRP" bit; @haydentiff and others have demolished it.
When he complains that there are 100+ bank pilots but few products he's talking out of both sides of his mouth, since he later admits that banks don't want to (cont)
When he complains that there are 100+ bank pilots but few products he's talking out of both sides of his mouth, since he later admits that banks don't want to (cont)
disrupt their multi-billion dollar correspondent banking and cross-currency payment systems, so if Ripple's trials have resulted in only a few products this isn't a surprise.
Getting traction off the line is hard but it's clear to me is that Rippe is getting traction.
Getting traction off the line is hard but it's clear to me is that Rippe is getting traction.
So these pilots, coupled with live deployments of their tech and the potential savings, will convince banks that they need to, at the very least, take Ripple seriously. That's a good thing.
Then he talks about the R3 Lawsuit which has since been settled but based on the filings seemed like a pretty boring contract dispute. We have no idea what the end result of that settlement is but it certainly looks like R3 is singing a different tune these days.
Tom then asserts that Ripple's XRP sales are majority of the company's revenue. Through its quarterly reports, Ripple has been very transparent about their sales. But Ripple is a private company and I don't know what source Tom has for his statement. But even if true, so what?
The next problem Tom sees is that validator operators aren't incentivized. Several Ripple developers have explained why incentivizing node operators is a bad idea: validators are supposed to be independent and compensating them would make them dependent.
And of course, there's the issue of who would be compensating them? The network using fees? According to data from xrpcharts.ripple.com/#/metrics the avg fees per day is around 22 XRP. That's a whopping 680 XRP a month, or about 5 XRP per validator. Not even enough to fund a wallet. 💰
Tom then asserts that bank clients don't want XRP FX risk but bank clients dealing with cross-border payment already take on FX risk anyways. If Ripple is to be believed, their new solutions reduces the risk and shifts it those that are willing to take it. So, all good, yes?
Then he talks about retail investors having no use for XRP. So what? Ripple's approach doesn't seem to rely on 'retail investors' who can already 'invest' in several other things that they have no direct use for, from Bitcoin and Ethereum, to pork bellies and barrels of oil.
Tom then says that if you include Ripple's escrowed funds, there's a market cap disparity. Now maybe this figure is important to speculators but does it really matter? Market cap is a largely meaningless number anyways. Why is "supply x last price" important or relevant?
Shifting back to more technical issues, Tom highlights the unfortunate issue of the missing ledgers but it's not as horrible as he makes it out because we aren't dealing with a UTXO based system (see ).
In a weird statement, Tom says that banks can settle in other cryptocurrencies. Uhm, yeah. Sure. Nobody's arguing that. In fact, banks can settle in anything they want. They could use Rai stones or even $DOGE. Banks will do what banks will do.
In another weird statement, Tom thinks that varying parties have different goals for XRP is a problem. If it is a problem, it ain't one that's unique to XRP. This is a young market still and as it matures and deepens market forces will reach an equilibrium.
Tom then suggests that there's confusion between validators and public nodes. He certainly seems confused, suggesting that there are 25 validators operating. There's over 1000 nodes, over 100 of which are configured as validators. See minivalist.cinn.app for more on this!
Now I'll be the first to admit that Ripple's terminology leaves a little to be desired ("validator" is a horrible name for the function performed by validators) but it's not that difficult: every node goes through the same process. Validators just publicly attest that they have.
Perhaps Tom's earlier comment about 25 validators is based on flawed understanding. After all, he does cite BitMEX's report which the #xrpcommunity (with an assist from @JoelKatz) absolutely demolished. Which also explains his misunderstanding of the consensus process generally.
Perhaps that misunderstanding is why he spreads #FUD by asserting that consensus is controlled by Ripple as he begins to discuss centralization and suggests that "Ripple's trusted unique node list controls who can change network rules". Not true: every validator gets to vote.
And yes, Ripple does publish a UNL, sure (one where the majority of nodes is operated by third parties). Anyone can publish a UNL and every server operator is free to listen to any UNL they want. This has been the case since the very beginning.
Lastly Tom brings up the old "Ripple can freeze funds" FUD. This one has been so thoroughly discredited that I'm amazed it still persists. For the record, Ripple never froze anything and has no ability to do so. If you disagree, point to the relevant code, Tom.
In closing, and in the spirit of the season, I want to be charitable so let me just say that Tom's research and analysis leaves a lot to be desired and lands his squarely on the naughty list. Merry Christmas one and all. #HoHoHo
