CRYPTO CURRENCY: WHAT FUTURE FOR VIRTUAL CURRENCY?
While crypto-currencies increasingly fascinate investors who follow the impetuous prices of virtual currencies , but also entrepreneurs and the world of venture capital which begins to turn massively to ICOs , individuals too are getting information and training. on this subject, oh so trendy and revolutionary.
Crypto currencies seem to have a bright future ahead of them. But is this really the case? Café de la Bourse offers you an overview of the probable scenarios around cryptocurrency. Currency of the future or the biggest financial crash in history, it's up to you to get your idea of the future of crypto currencies.
Read also our article : Cryptocurrency: How to Invest in Crypto, Bitcoin and Virtual currency
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VIRTUAL CURRENCY: FUTURE BIGGEST STOCK MARKET CRASH IN HISTORY
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First possible scenario: cryptocurrencies gain ground before disappearing in a monumental fiasco, generated by the explosion of a colossal bubble. Only geeks and anti-banking activists continue to use cryptocurrency, as it did in its early days.
The risks of cryptocurrency are immense
La Compagnie des CGPI in an email published on November 6, 2017 in which it indicated its refusal to " participate in the consultation for a specific regulation on Initial Coin Offerings and the Unicorn program " (in other words on Bitcoin and other crypto-currencies), launched by the Autorité des marchés financiers ( AMF ) at the end of October [2017], alert on the risks associated with Bitcoins and other crypto-currencies: “absence of specific regulations; risks associated with information documentation; capital losses; market volatility or absence; fraud and money laundering ”.
We can also add to this the risks pointed out by the CEO of JP Morgan who, in the midst of a bubble at the end of 2017, described Bitcoin as the biggest scam in history: “its value is not based on any real asset and its rate. exchange rate does not represent the value of an economy or purchasing power parity ”,“ the very high volatility of its prices disqualifies it for the moment as a safe haven asset unlike gold ”. Remember also that a large part of all Bitcoins in circulation is held by only a few users. There is therefore a very high concentration of tokens on a few addresses and we can therefore understand the concerns that are being created around Bitcoin prices. If this is only Bitcoin, it is clear that many cryptocurrencies present the same risks.
The CGPI company, through the voice of its Honorary Chairman Jean-Pierre Rondeau, was determined at the end of 2017: “ It therefore seems that it is too early to launch a regulation on a product that even the regulators do not know. ", Continues the association which concludes not wanting" to participate in this incomprehensible active or passive complicity of the international public authorities by lending itself to a semblance of regulation which can only deceive the savers as for products which prepare the next biggest financial crash in the history ", indicates the professional association of CIF which continues:" The crypto-currencies, of which Bitcoin is the most famous, will be the biggest financial scandal of the years to come up ".
Result: at the start of 2020, even if the AMF has provided for a framework for service providers on digital assets (PSAN), there is to date, according to our information, no service provider having obtained authorization from the AMF . As for investing in crypto currencies, it must be done alone. No wealth management advisor will venture to advise you on these assets which are not, in the eyes of the AMF, considered as miscellaneous assets.
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Abusive speculation marks the end of cryptocurrency
Indeed, the speculation, the intensity of which was noted with dismay in 2017-2018, could start again and even intensify, thus triggering a monumental crash. Already today, apart from hackers specializing in ransomware or traffickers who want to move capital outside traditional channels or launder dirty money, the majority of cryptocurrency buyers invest in virtual currencies in the marketplace. hope to resell them more expensive to another person, regardless of the real value of that asset. This is called speculation.
The 80 American hedge funds which, in 2017, specialized in crypto-currencies in order to take advantage of their significant volatility when the latter has deserted most of the major financial markets. They also appreciate that these new currencies are very little correlated to traditional markets and little influenced by them. It did not take more for the players in the financial sector to invest in crypto currencies. We can already note that the Chicago Mercantile Exchange group, a stock exchange specializing in futures on rates and foreign exchange among others, has announced the upcoming launch of a futures contract on Bitcoin. The United States thus officially makes it possible to speculate on the most famous of the crypto currencies.
The Bitcoin , first crypto currencies created by Satoshi Nakamoto, thus enters the course of major currencies. And everyone can now invest in Bitcoin, but also in many other crypto currencies: traders, institutions, banks, and also individuals who can directly buy a cryptocurrency and keep it in a wallet or bet on a virtual currency. through a derivative product on a crypto currency offered by a stock broker. And we can even trade these highly volatile currencies with a leverage effect, which further reinforces price volatility, with users who are less and less expert, to whom the risks and the product increasingly escape.
Should you buy Bitcoin?
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CRYPTO CURRENCIES SURVIVE AND IMPOSE THEMSELVES IN CERTAIN SECTORS ONLY
In this second scenario, we start from the point of view that encrypted currencies will continue to coexist with conventional currencies, governed by the major central banks, but will not take the boom to which they are predestined.
Virtual currencies penalized by central bank regulation
There are many factors that work against crypto currencies. First, their primary characteristic: they are not governed and regulated by a central bank. This is both an advantage and a disadvantage. But the advantage should not last long. Indeed, if Bitcoin or any other encrypted currency begins to take on too much importance, States, central banks and financial institutions will intervene in order to regulate it and thus make it lose all its interest.
And on the downside, the lack of regulation is undoubtedly at the origin of the sulphurous reputation of crypto currencies. A negative image that is not easy to be forgotten and which should therefore remain a disadvantage even in the event of regulation. It must be said that the first uses of virtual currencies were, to say the least, illegal: trafficking in arms, drugs and human beings. Faced with this blackboard, several countries have launched a major offensive against crypto currencies, like China which is closing all Bitcoin exchanges and banning ICOs on the grounds of fighting against money laundering and evasion. fiscal.
Cybercrime and scam: cryptocurrency on the spot
We also think of the many cases of piracy that still tarnish the image of encrypted currencies which, despite a technology that makes them impossible to counterfeit (the famous blockchain ), still struggle to impose themselves in the minds of ordinary people like a secure and tamper-proof solution. Perhaps because the notion of "over-the-counter on the Internet" refers too much to the idea of piracy and illegality? Still, indeed, piracy remains one of the major problems of encrypted currencies. The Ethereums corresponding to $ 30 million stolen in July 2017 because of loopholes in the security of websites offering wallets left their mark. And too bad if there has never been a hack related to the protocol itself, whether on Ethereum or on Bitcoin, because of Blockchain technology, eminently reliable and inviolable. Because indeed, if Bitcoin and other crypto currencies seem impossible to hack, the fact remains that they are vulnerable to major risks such as wallet theft or scams.
The appearance of forks could harm the stability of the cryptocurrency
Another negative point of crypto-currencies that may contravene their development: Forks of all kindsand creations in tire-larigot. Duplications of Bitcoin are starting to multiply. There was Bitcoin then Bitcoin XT, Bitcoin Classic then Bitcoin Unlimited, Bitcoin Cash, Bitcoin Gold. Ethereum is not left out and also undergoes Forks (a split takes place and a new currency is created from the technology of the old one), which makes us say that the well-established and relatively old cryptocurrencies are not immune to change either. It should also be borne in mind that new cryptocurrencies emerge regularly, with varying degrees of success. In short, it is a rapidly changing sector, where the lines are constantly moving, and this glaring lack of stability can harm the development of virtual currencies, or in any case to those who wish to invest in these crypto-currencies.
Crypto currencies not green enough to break through
Cryptocurrencies are particularly energy intensive and although it may seem trivial, this is, without a doubt, a point that could slow down the development of cryptocurrencies. Just think that each Bitcoin transaction requires as many kilowatt hours as an American household over a week. According to the specialist Digiconomist, the Bitcoin protocol and IT infrastructure consume a total of more than 26 terawatt hours of electricity per year, or 26,000 billion watt hours. And the energy consumed in one year by Bitcoin could power 2.35 million American households. So of course Bitcoin technology is relatively outdated compared to other crypto currencies such as Litecoin , Ethereum or Ripple.. The Bitcoin transaction takes a long time to be validated and is particularly energy intensive. Still! It is currently very difficult to imagine widespread use of cryptocurrency in the near future.
Very useful virtual currencies in certain segments of the economy
Even if, in this scenario, crypto currencies remain in the shadow of traditional currencies and remain niche currencies used by geeks, we must not forget that active crypto could still do well in certain areas. Thus, crypto-assets could well establish themselves in certain sectors where they will prove to be very useful and in particular in finance where ICOs will continue to make it possible to raise funds and the digital assets of the Blockchain, through smart contracts, will facilitate dividend distributions and other securities transactions.
CRYPTOCURRENCY REPLACES CURRENT CURRENCIES
“At present, virtual currencies like Bitcoin do not yet pose a threat to the existing order of fiat currencies and central banks. Why ? Because they are too volatile, too risky, too energy intensive, because the underlying technologies are not scalable enough, many of them are too opaque for regulators and some have been hacked. But many of these flaws are just technological challenges that could be overcome over time. "
These are the first words of Christine Lagarde's speech at the Independence 20 Years conference organized by the Bank of England in September 2017. And then she added “Citizens may one day prefer virtual currencies” (“Citizens might one day prefer the crypto-monnaies ”in French).
Will cryptocurrencies ever replace our current currencies? Certain elements point in this direction. In this scenario, discover our overview of the events and concrete facts which demonstrate that virtual currencies could well gain ground very very quickly… until they occupy it entirely?
States seize crypto-currencies
While the peculiarity of crypto-currencies like Ripple but also Bitcoin, Ether, Litecoin and all other crypto-currencies is to function independently of any central bank, the situation could well change. Legislators support the development of virtual currencies. We are more and more distant from the initial model and without any rule of the beginnings of Bitcoin. Japan has already passed a law standardizing and regulating such digital currencies like BTC and XRP 10. In the United States, the SEC has ruled: tokens (units of cryptocurrencies) are real digital assets akin to stocks and must therefore comply with the regulatory framework in force in the United States for this type of product.
But it can and should go even further!
Vladimir Putin has just announced the upcoming CryptoRuble issue. An initiative that is in line with the conclusions of the latest study on new virtual currencies from the Bank for International Settlements (BIS). According to her, it is unlikely that existing cryptocurrencies will ever replace traditional currencies, but she considers "essential that central banks, responsible for the printing and circulation of currencies, study the possibility of issuing their own cryptocurrency. ". Several countries are taking this path, notably Sweden, a country in which cash transactions only represent 2% of the total amount of financial exchanges and which is therefore concerned about the risks associated with the disappearance of cash in the event of a financial crisis. Thereby,
In Japan, on the contrary, cash is used in the majority of transactions (around 70% of exchanges against 30% on average in other developed countries), to reduce the cost that this situation entails for companies and the State, several Japanese banks have launched a joint virtual currency project to develop their mobile payment offering which has received support from the central bank of Japan.
It is understandable that the advent of digital and decentralized national currencies, such as for example a “digital euro” issued by the European Central Bank is on the agenda. Moreover, the Banque de France announced the experimentation, from 2020, of a Central Bank Digital Currency (MDBC), a first in Europe! But it is in reality an experiment which should weigh in the study of a possible e-euro, a European virtual currency called for by Christine Lagarde, President of the European Central Bank.
Read also our article
Global success of virtual currency with individuals
Individuals are embracing cryptocurrencies. It can be noted that currently, ATMs are popping up everywhere like in the Netherlands which can transform banknotes and coins into Bitcoin and vice versa. The Cryptocurrency Revolution seems to be well underway!
It is therefore quite possible that the entire population uses cryptocurrencies to pay for their purchases in everyday life, but they could also use Blockchain technology for all kinds of everyday applications such as recording money. transactions and proof of real estate ownership, serving as a supermarket receipt and saving paper, recording medical history, etc.
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Ripple (payment protocol)
From Wikipedia, the free encyclopedia
(Redirected from XRP)
Arthur Britto, David Schwartz, Ryan Fugger
Initial release
2012
Written in
Server: Linux (RHEL, CentOS, Ubuntu), Windows, macOS (development only)
Real-time gross settlement, currency exchange, remittance
Website
developers.ripple.com/xrp-ledger-overview.html
Ripple is a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs Inc., a US-based technology company. Released in 2012, Ripple is built upon a distributed open source protocol, and supports tokens representing fiat currency, cryptocurrency, commodities, or other units of value such as frequent flier miles or mobile minutes.[2] Ripple purports to enable "secure, instantly and nearly free global financial transactions of any size with no chargebacks." The ledger employs the native cryptocurrency known as XRP.
In December 2020, Ripple Labs and two of its executives were sued by the U.S. Securities and Exchange Commission (SEC) for selling XRP tokens, which the SEC classified as unregistered securities.[3]
History
Ripple was conceived by Jed McCaleb and built by Arthur Britto and David Schwartz who then approached Ryan Fugger who had debuted in 2005 as a financial service to provide secure payment options to members of an online community via a global network.[4][5] Fugger had developed a system called OpenCoin which would transform into Ripple.[6][7] The company also created its own form of digital currency referred to as XRP to allow financial institutions to transfer money with negligible fees and wait-time.[8] In 2013, the company reported interest from banks for using its payment system.[9]
By 2018, over 100 banks had signed up, but most of them were only using Ripple's XCurrent messaging technology, while avoiding the XRP cryptocurrency due to its volatility problems.[10] Representatives of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), whose market dominance is being challenged by Ripple, have argued that the scalability issues of Ripple and other blockchain solutions remain unsolved, confining them to bilateral and intra-bank applications.[10] A Ripple executive acknowledged in 2018 that "We started out with your classic blockchain, which we love. [But] the feedback from the banks is you can’t put the whole world on a blockchain."[11]
Ripple relies on a common shared ledger, which is a distributed database storing information about all Ripple accounts. Chris Larsen told the Stanford Graduate School of Business that the network was managed by a network of independent servers which compare their transaction records, and that servers could in theory belong to anyone, including banks or market makers.[6] Ripple validates accounts and balances instantly for payment transmission and delivers payment notification within a few seconds.[12] Payments are irreversible, and there are no chargebacks.[13]
Ripple Labs continued as the primary contributors of code to the consensus verification system behind Ripple, which can "integrate with banks’ existing networks."[14] Since 2013, the protocol has been adopted by an increasing number of financial institutions to "[offer] an alternative remittance option" to consumers.[15] By December 2014 Ripple Labs began working with global payments service Earthport, combining Ripple's software with Earthport's payment services system. The partnership marked the first network usage of the Ripple protocol.[16] On December 29, 2017, XRP briefly became the second largest cryptocurrency, with a market capitalization of US$73 billion.[17]
Litigation
A class action was filed against Ripple in May 2018 "alleging that it led a scheme to raise hundreds of millions of dollars through unregistered sales of its XRP tokens." According to the complaint, "the company created billions of coins 'out of thin air' and then profited by selling them to the public in 'what is essentially a never-ending initial coin offering'."[18]
The U.S. Securities and Exchange Commission (SEC) initiated legal proceedings against Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen on December 21, 2020, for allegedly selling unregistered securities. In the lawsuit, the SEC claimed that XRP was a security instead of a commodity, because it was generated and distributed by Ripple Labs in a centralized fashion and was not being adopted by financial institutions for its advertised use cases.[3] The SEC stated that Ripple executives sold 14.6 billion units of XRP for more than $1.38 billion to fund the company’s operations and enrich themselves.[19]
In response, Garlinghouse criticized the SEC and indicated that Ripple Labs would defend itself in court.[20] Coinbase delisted XRP on December 28;[21] an investor filed a class action on December 30 alleging that Coinbase sold XRP tokens with the understanding that they were unregistered securities.[22]
Reception
For its creation and development of the Ripple protocol (RTXP) and the Ripple payment/exchange network Ripple Labs was named as one of 2014's 50 Smartest Companies in the February 2014 edition of MIT Technology Review.[23] A scientific study made by two researchers from Stanford and Stockholm University that studied the money production from an energy consumption point of view and a macroeconomic level stated that running a server on Ripple was comparable to the energy needs of running an email server.[24]
See also
Citations
^
a b "Official source code". Github. Retrieved May 14, 2014.
^ "Ripple Labs Banks $3.5M for Open-Source Payments System and Virtual Currency". The Wall Street Journal Pro. Dow Jones & Company. November 12, 2013. Retrieved January 28, 2014.
^
a b Popper, Nathaniel (December 22, 2020). "Cryptocurrency Company Ripple Is Sued by S.E.C." The New York Times. Retrieved January 7, 2021.
^ Peck, Morgan (January 14, 2013). "Ripple Could Help or Harm Bitcoin". IEEE Spectrum. Institute of Electrical and Electronics Engineers. Retrieved January 27, 2014.
^ Liu, Alec. "Ripple Could Make Bitcoin Great (or Destroy It)". Motherboard. Archived from the original on February 7, 2014. Retrieved January 27, 2014.
^
a b Andrews, Edmund L. (September 24, 2013). "Chris Larsen: Money Without Borders". Stanford Graduate School of Business. Retrieved April 10, 2015.
^ Bala, Dr. Venkatesh (October 8, 2014). "Lessons in Innovation Leadership: Chris Larsen". Nielsen. The Cambridge Group. Retrieved June 10, 2015.
^ Lashinsky, Adam (August 22, 2014). "Isn't one Internet enough?". Fortune Magazine. Retrieved April 10, 2015.
^ Popper, Nathaniel (November 11, 2013). "The rush to coin virtual money with real value". The New York Times. The New York Times Company. Retrieved January 26,2014.
^
a b Arnold, Martin (June 6, 2018). "Ripple and Swift slug it out over cross-border payments". Financial Times. Archived from the original on September 27, 2019. Retrieved October 28, 2019.
^ "Banks unlikely to process payments with distributed ledgers for now, says Ripple". Reuters. June 13, 2018. Retrieved October 30, 2019.
^ Simonite, Tom (April 11, 2013). "Big-name investors back effort to build a better Bitcoin". MIT Technology Review. Retrieved January 26, 2014.
^ Schwartz, Ariel. "Bitcoin 2.0: Can Ripple Make Digital Currency Mainstream?". Fast Company. Retrieved February 2, 2014.
^ Cooper, Jane (March 11, 2014). "Ripple Labs CEO looks to revolutionise online payments". The Banker. Retrieved April 10, 2015.
^ Scully, Matt (September 24, 2014). "Alternative Money Mover Ripple Labs Enters U.S. Banking System". American Banker. Retrieved June 16, 2015.
^ Casey, Michael J.; Vigna, Paul (December 4, 2014). "BitBeat: Ripple Partners With Global Payments Service Earthport". Wall Street Journal. Retrieved June 9, 2015.
^ Leinz, Kailey (December 29, 2017). "Ripple's 53% Surge Makes It the Second-Biggest Cryptocurrency". Bloomberg. Retrieved February 14, 2019.
^ Katz, Lily (May 4, 2018). "Ripple Hit With Class-Action Suit Over 'Never Ending ICO'". Bloomberg. Retrieved January 27, 2019.
^ Crossman, Penny (December 29, 2020). "How will SEC complaint affect banks' relationships with Ripple?". American Banker. Retrieved January 8, 2021.
^ Roberts, Jeff John (December 21, 2020). "Ripple says it's about to be sued by the SEC, in what the company calls a parting shot at the crypto industry". Fortune. Retrieved January 7, 2021.
^ Campbell, Ian Carlos (December 28, 2020). "Coinbase halts trading of XRP following SEC suit against Ripple". The Verge. Retrieved January 7, 2021.
^ Yasiejko, Christopher; Kharif, Olga (December 30, 2020). "Coinbase Sued Over Crypto XRP Commissions After SEC Pursues Ripple". Bloomberg News. Retrieved January 7,2021.
^ Bergstein, Brian. "50 Smartest Companies". MIT Technology Review. Retrieved March 12, 2014.
^ Leopold, Sid John; Englesson, Niclas (November 27, 2017). "How Eco friendly is our money and is there an alternative?" (PDF). Retrieved August 27, 2018.
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