The world's third largest cryptocurrency by market capitalization, XRP, causes a lot of controversy. The problems surrounding the digital token derive from the fact that its market price is not equal to the volume of profit. This creates many reactions from token holders, potential investors, analysts and the general cryptocurrency community.
The performance of the price of digital assets alters the Economic Law of Demand and Supply, which states that when demand is high, the price will be high. Its use case is larger than Bitcoin and Ethereum, but its price is less than both. In addition to being used in peer transactions and negotiated in exchanges, it has more public use than the two main crypts.
The cross-border payment and technology company Ripple has an important participation in XRP. Its RippleNet platform allows the network with more than 300 financial institutions worldwide to use XRP. All Ripple network institutions, which include banks and other payment processing companies, use their decentralized financial tools to facilitate cross-border payments.
These financial mechanisms, such as On-Demand Liquidity (ODL), are integrated with the native XRP token, which allows all banks and network payment institutions with Ripple to use XRP.
The big question is, "Why doesn't this great use increase the price of XRP?"
Bitcoin, for example, has a large volume of profits by individuals and organizations, which increases its price to outperform other digital assets. Ethereum is a blockchain-based public computing platform that supports smart contract functions, it is a global platform for blockchain and money applications that allows developers and programmers to create decentralized applications. These features create a massive demand for Ethereum and also increase its price.
Unfortunately, the case is not the same for XRP, although it is widely used in the public sector by financial institutions in the Ripple chain, its price performance has not improved compared to BTC and ETH.
Obviously, XRP does not have much demand in the private sector for individuals and organizations. This explains the difficulty in the price movement, and investors are not ready to buy it due to some problems that strongly affect the return on the asset.
Is XRP a security token?
If XRP is a security or not a problem that has not yet been resolved. Although this matter has been deliberated by the regulatory commissions and the court, it has not yet been decided whether the XRP should be classified as one or not.
In a recent interview with Cheddar, Heath Tarbert, chairman of the Commodity Futures Trading Commission (CFTC), said XRP could be classified as a security by the Securities and Exchange Commission (SEC). He went further and explained that his commission shares a jurisdiction with the SEC that will allow them to determine if XRP is a security or a commodity. If the token qualifies under the jurisdiction of the CFTC, it will be classified as a good, if it is under the jurisdiction of the SEC, it will be a guarantee.
He explains that the commissions have been working together for more than a year to determine the jurisdiction under which XRP qualifies. He also noted that Ethereum is the only digital asset that can be classified as a commodity because it is under the jurisdiction of the CFTC.
Apparently, these outstanding issues prevented major investors from buying XRP.
History with cryptocurrency exchanges
In the past, major cryptocurrency exchanges rejected Ripple's request to include XRP in its platforms. Gemini and Coinbase also rejected Ripple's offer to include XRP in its platform. This is based on the US government warning. that cryptocurrency exchanges should not list any token considered a security.
The Bitbox exchange with line backup recently announced that it was excluding XRP from its listing for not complying with its liquidity, performance, reliability and regulatory requirements.
Ripple has a great influence on XRP, as well as on whales in the price of Bitcoin. Investors and analysts say that the control of Ripple is the reason for the poor performance of XRP in the market. This claim is based on the fact that a large amount of XRP is sold quarterly in the open market.
However, Brad Garlinghouse, CEO of Ripple, reacted to this in his recent speech. The CEO stated that his company cannot control XRP prices.
Some critics have also come to refute Garlinghouse's claims. According to an analyst, Tone Vays, the XRP token is highly centralized, mainly due to the control of Ripple. In his tweet, he said Ripple has the authority to "give orders" that can prevent anyone from using the token.
These concerns about XRP prevent investors from seeing it as "dark and unfeasible." The effect reduces the price movement of the XRP. Its performance has not improved since 2018, when it reached the current highest price, at $ 3.84. So far, in 2020, the price has been going up and down although without much percentage difference.
Initially this year, the XRP attempted to go from a minimum of $ 0.19 to a maximum of $ 0.24, but was forced to return to $ 0.20 and fluctuates between $ 0.20 and $ 0 23.