Is Ripple Centralized? Debunking the Myths

The cryptocurrency universe is very extensive. Since Nakamoto introduced the world to a decentralized digital currency called Bitcoin in 2009, a lot of developments have taken place. With so many cryptocurrency ‘experts’ saying so many different things, differentiating the facts from the opinions can be a bit challenging. The issue of whether or not Ripple is centralized is among those that have continued to confuse many.

What is a decentralized currency?

A decentralized currency is a currency which is not controlled or regulated by a central authority. With fiat currencies (what most of us refer to as money such as US Dollar or Japanese Yen), there is a reserve bank or a central regulator, usually put in place by the government that oversees the creation and flow of this currency.

With decentralized currencies, no one person or institution is in charge of the market. Order is maintained by complex mathematical algorithms and cryptography.

With this in mind, here are among the issues that many in the crypto community find contentious:

1. Ripple’s holding of a majority of XRP

This has been one of the most contentious issues users have raised. With most cryptocurrencies, the coins are mined by the miners who validate transactions and are awarded block rewards. This is known as the proof of work consensus algorithm and was made popular by Bitcoin. Ripple deviated from this structure and had all the 100 billion XRP pre-mined. The company kept a majority of the XRP (60 billion) and the rest is being traded on the market. The company later pledged to lock away 55 billion XRP in an escrow that’s secured cryptographically. It could only release a maximum of 1 billion XRP a month if it required money to finance projects. It has however never come close to selling that amount and according to data released by the company; the most it has sold is 300 million XRP a month. The big concern is that the company could dump all its coins which would dilute the price of XRP greatly. However, this is unlikely as Ripple would be among the biggest losers if the XRP market collapsed.

2. Ripple works with traditional banks, the enemy

In the cryptocurrency sphere, traditional banks are considered to be the enemy. In fact, Nakamoto developed Bitcoin as a response to the 2008 financial crisis that was largely driven by the collapse of many banks. Ripple’s working with banks is seen by some as the very definition of centralization. However, Ripple is not owned or controlled by any of the banks it works with. All Ripple does is develop blockchain-based remittance solutions for banks and other financial institutions. Ripple’s decentralization and independence is not at all compromised or interfered with by the banks it works with.

3. Garlinghouse calls for regulation regularly

Brad Garlinghouse is a renowned figure in the cryptocurrency universe and his statements about regulations in the market have been misinterpreted by many as Ripple’s support for centralization. This couldn’t be further from the truth. Garlinghouse has called for regulation in the market in an effort to introduce order, weed out scam cryptocurrencies and protect the consumers’ interests. While decentralization largely advocates for the government to keep away from the finance sector and let maths and cryptography govern the market, this has opened up opportunities for fraudsters to scam investors. The role of regulations would be to check the conduct of the people in the industry, not to interfere with the independence of the blockchain. The SEC may not be anyone’s favorite government agency, but it has stopped a number of scams in the industry which would have cost investors millions of dollars. So no, Garlinghouse does not advocate for regulations in an effort to centralize the crypto industry.


In an interview with Fortune magazine, Garlinghouse clarified on the issue:

Ripple’s technology, IRP, is open source, XRP Ledger is open source. If Ripple as a company went away, XRP would continue to trade. To me that’s the definition of decentralization.”

Ripple is not a centralized cryptocurrency. While it may differ fundamentally with most cryptocurrencies in some areas, it is decentralized and continues to champion Nakamoto’s vision in a slightly different way from Bitcoin.



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