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YouTuber Questions XRP’s Utility as Ripple CTO Responds
In a heated exchange on Crypto Twitter, popular YouTuber Andrei Jikh expressed scepticism regarding the long-term viability and utility of XRP and the Ripple network, particularly its 300+ bank partnerships that have yet to translate into meaningful on-chain transaction volumes despite a decade and a half of existence. Jikh’s critiques highlighted several concerns about XRP’s application as a bridge asset given its volatility and the growing inclination for stablecoins in international transactions.
Concerns Raised by Andrei Jikh
With over two million followers on the platform, Jikh’s scrutiny centred on the lack of observable on-chain activities that should correlate with Ripple’s extensive bank alliances. He questioned why, after 13 years, these partnerships haven’t yielded substantial transaction volumes.
Jikh also raised queries about the practicality of XRP as a bridge asset in the face of its price fluctuations. He argued that with growing adoption of stablecoins, the necessity for bridge assets like XRP may dwindle, casting doubt on their future relevance in a landscape increasingly favouring proprietary and alternative blockchains for cross-border payments.
Moreover, he deliberated on the potential challenges that a US-centric, privately governed network like Ripple might face in an already fragmented and politically charged financial environment.
Ripple’s CTO Responds
David Schwartz, Ripple’s Chief Technology Officer (CTO), also known as Joel Katz, responded to Jikh’s critiques in a detailed manner via a Twitter thread. He acknowledged the concerns surrounding Ripple’s integration with traditional financial systems and explained that the slow uptake is partly due to institutions historically favouring off-chain digital asset usage.
Schwartz indicated that upcoming regulatory features, including permissioned domains, would enhance institutional adoption of XRP by ensuring compliance. He acknowledged the slow rate of adoption but maintained that substantial improvements were on the horizon.
In addressing the operational decisions of Ripple, Schwartz revealed that even the company does not yet utilise the XRP Ledger (XRPL) for payments due to compliance concerns. He stated, “Even Ripple can’t use the XRPL DEX for payments yet because we can’t be sure a terrorist won’t provide the liquidity for payment. Features like permissioned domains will address this.”
The Case for Volatility and Institutional Adoption
Regarding XRP’s price volatility, Schwartz offered a counterpoint, asserting that in certain contexts, volatility can be advantageous. He remarked, “Generally, for most digital assets the view is that the upside is worth more than the downside.” Schwartz argued that asset interoperability and portability would be far more critical for institutional players than the specific blockchain in use, anticipating a multi-chain future.
Schwartz draws a parallel between Ripple’s potential and notable institutions like BlackRock, suggesting that these entities may seek to align their operations with the trends such as those introduced by Circle’s USDC.
Geopolitical Considerations
On the matter of geopolitical risks, Schwartz clarified that the XRP Ledger is not strictly US-controlled, emphasising its global operations through licensed entities. However, he acknowledged existing challenges stemming from Ripple’s US affiliation, especially in sensitive markets that might resist foreign involvement.
“…you’re not going to see it in North Korea or Cuba any time soon and there might be, in some cases, pushback to a US company having some control over, say, payments between Pakistan and Saudi Arabia,” he stated. Schwartz further noted that Ripple is focused on building trust and exploring opportunities where it is welcomed.
In summary, while controversies surrounding XRP’s utility and adoption persist, both Jikh and Schwartz played critical roles in discussing the complexities and realities of Ripple’s operations within the global financial landscape. With stablecoins gaining traction and institutional pathways gradually unfolding, the future of XRP may hinge on how Ripple navigates these challenges and evolves in an ever-changing market environment.
