Ripple CEO Believes Bitcoin May Face Similar Fate To Napster
Brad Garlinghouse, CEO of Ripple, believes that Bitcoin’s influence on the cryptocurrency market could end very soon and that the leading crypto is not destined to become a global currency.
Although cryptocurrency prices are currently linked to bitcoin’s prices, Garlinghouse is convinced that it could end very soon as the market learns the differences and use cases behind these digital tokens.
“There’s a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies,” said Garlinghouse to CNBC at the Power Lunch on May 30, 2018. “It’s early, over time you’ll see a more rational market and behaviors that reflect that.”
Garlinghouse also stated recently that he thinks bitcoin will not become a global currency. The Ripple CEO stated to reporters at Money 20/20:
“I think it’s not going to be the panacea that people once thought it would be, where it would solve all of these different kinds of problems. Instead, you’re seeing specializations of different kind of ledgers, different kinds of blockchains.”
The San Francisco-based company is currently developing a decentralized blockchain-based network to facilitate faster global financial payments. According to CNBC, the company hit significant milestones in its first quarter after signing 20 production contracts with new companies. On May 30, 2018, Ripple also signed a deal with the largest bank in Kuwait to test the company’s token for cross-border payments.
Ripple Token Considered a Poor Performer in Crypto Markets
However, despite these achievements, the Ripple token lost 70 percent of its value and was considered a poor performer compared to other cryptocurrencies on top of the leader board. Though, it wasn’t just the Ripple token that experienced significant declines. The cryptocurrency sector had an extremely bearish market with the market capitalization of the whole cryptocurrency industry falling more than 50 percent.
“It’s still a nascent industry, the speculation in the market dominates the trading activity,” said Garlinghouse. “I think it’s a matter of time until people understand the different use cases.”
Although there are currently more than 1,500 cryptocurrencies, Garlinghouse believes that over 99 percent of these digital assets will no longer exist in the next ten years. “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,” said Garlinghouse.
Cryptocurrencies and Securities Regulation
Garlinghouse also spoke to CNBC about cryptocurrencies in regards to securities regulation in the US. SEC Chairman Jay Clayton announced in March that all initial coin offerings (ICOs) constitute as securities, however, Garlinghouse believes that the Ripple XRP Token should be classified differently.
“If you own XRP, you don’t own rights to the profits or any dividends to the company,” said Garlinghouse. “XRP has real utility.”
Garlinghouse, however, noted that while some cryptocurrencies have no proven use cases, others have launched ICOs to scam and cheat investors. The CEO of Ripple believes that intervention by regulators to protect retail investors are important and recognizes that not all tokens are frauds and that many, have real utility.
“The SEC is getting involved as they should because there have been frauds committed,” said Garlinghouse. “We have been advocate of yes the government should get involved, the government should be protecting investors and companies, but there’s also examples of real utility.”