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Research Pries Into Ripple’s XRP Data

January 29, 2019


Ripple, and their native cryptocurrency XRP are one of the oldest and well known blockchain networks. Upon launch of the coin, Ripple endorsed their network as a bridge between the tradition financial system and the burgeoning fintech industry. The two founders of the company are Chris Larsen, who is one of the most wealthy people in the world, and Jed McCaleb, who was the creator of Mt. Gox Bitcoin Exchange. Mt. Gox was one of the first Bitcoin exchanges, and has since been shut down and involved in numerous lawsuits.


Ripple vs. XRP


It’s important to understand the distinction between Ripple and XRP. Ripple is a financial services company, which created their own cryptocurrency - XRP. The value of this currency is not directly tied to the performance of Ripple as a company, and in fact is not a required part of Ripple’s services.


And unlike other popular cryptocurrencies such as Bitcoin, Litecoin or Ethereum, it is not a truly peer-to-peer network. And because of this, it allowed Ripple to distribute the tokens to their own employees and other specific financial institutions. A recent study looks deep into these choices, and questions if the market cap value and trading volume of XRP are truly accurate.


Selling Restrictions


The circulating supply of XRP is delineated as 41 billion tokens, however because who is holding large chunks of those XRP, the true liquidity could be as low as 19.2 billion XRP according to the study. It’s known that at least 6.7 billion XRP are held specifically by Ripple’s co-founder Jed McCaleb and 2.5 billion are held by Ripple’s associated non-profit RippleWorks. Another 4.1 billion XRP were put into use for Ripple’s money services business, making them subject to selling restrictions.


The report takes these estimates one step further to content that the actual market cap value of XRP would be significantly lower. The potential is that if all of those billions of XRP are in fact inaccessible to retail investors, they can’t be counted for the overall value of XRP’s market cap. Spokesperson from Ripple disputed Messari’s findings:


“Not only does this report contain several inaccurate assumptions around lockups and selling restrictions, the entire report is based on an incorrect calculation of market cap. While decentralized digital assets like XRP are different from traditional equities, the term ‘market cap’ is always a very simple calculation: current price X total number of the asset = market capitalization. That puts XRP’s current market cap at approximately $31 billion. We believe that any other calculation of market capitalization for XRP is not a clear representation of the truth.”


Regardless of the market cap value, there are still issues with liquidity and where the trading volume data is coming from:


“Ripple has not shared the methodology or reference exchange data it uses to calculate trading volume for XRP, a critical data point that drives selling restrictions. More than 99% of XRP trading volume appears to come from overseas exchanges, many of which have been suspected of wash trading”




By: BGN Editorial Staff

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