Long-time members know that I’ve always been wary of more centralized cryptocurrencies such as Ripple.
As you probably know by now, the SEC is going after Ripple in a big way. Here’s a brief summary from legal news site JDSupra,.
The SEC’s complaint alleges that, starting in 2013, Ripple began to sell digital assets, known as XRP, as an unregistered securities offering. Ripple also used XRP in exchange for non-cash consideration, such as labor and market making services. Larsen and Garlinghouse also sold large amounts of XRP and personally earned $600 million.
…The SEC has brought actions against several other coin offerings but this is the most significant case yet.
This part certainly sticks out: “personally earned $600 million…” Ripple claims to be decentralized, but it really isn’t. There’s a central authority with a huge treasury full of XRP, which it sells to run Ripple Company, a blockchain business that’s sort of connected to XRP the crypto.
This is very different from how bitcoin and other truly decentralized projects are run. Bitcoin doesn’t have a centralized treasury account. It has a vast network of mining machines and nodes spread around the world, millions of users and an army of coders who choose to spend their time working to improve the network.
Naturally, Ripple (XRP) hasn’t taken this news well. Ripple (XRP) is currently trading at around $0.29, down from a recent high of more than $0.70 in November 2020 (XRP’s all-time high was more than $3.00 in January 2018). If I was an XRP owner, I would cut my losses and move on. I don’t think XRP will recover from this blow. It could, of course, but I just don’t think it’s likely.
Nano, Decred Shine
Since the Ripple news broke, two of our portfolio coins have done quite well — nano (NANO) and decred (DCR). Nano is up from around $1.04 on January 1 to $3.25 as I write this on January 14. Decred is up from around $43.70 to $56.89 during that same time period.
I don’t think it’s a coincidence that nano and decred are among the most decentralized altcoins in the world. Neither had an ICO. Both have strong communities and unique features.
Truly decentralized coins are hard to find these days. Ones that didn’t do an ICO are even rarer. Nano and decred stand out from the crowd. And I like their prospects in this new post-Ripple-vs-SEC world. Their truly decentralized nature means that enforcement actions against them are extremely unlikely.