XRP is the key to Ripple’s profitability; here’s why that could be a big issue 🚨 This article is 5 years old...
XRP is the key to Ripple’s profitability; here’s why that could be a big issue
2 min read
Updated: Mar. 3, 2020 at 9:12 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Ripple’s close connections to XRP have long been a polarizing topic within the crypto industry, with the token’s detractors claiming that the company’s monetization of it via their quarterly sales has come at the expense of investors, while others claim that the token is an unregistered securities product.
Now, Ripple CEO Brad Garlinghouse has been quoted saying that XRP is the key to his company’s profitability and that without their quarterly token sales they would not be cash flow positive.
This statement has generated some buzz amongst popular industry commentators, but it also comes as prominent attorneys within the blockchain space begin concluding that XRP is likely to be deemed a security at some point in the future.
Garlinghouse: Without selling tokens, Ripple would not be profitable
As recently quoted within a Financial Times report, Ripple’s CEO explained that without his company’s quarterly token sales, they would not be profitable or cash flow positive, signaling that these controversial sales are the main source of revenue.
“We would not be profitable or cash flow positive [without selling XRP].”
This statement is quite startling in that it shows that they remain fairly dependent on their quarterly token sales — which have been widely attributed to XRP’s over 40 percent price decline in 2019 — and that they are unlikely to let up anytime soon.
It also begs the question: has XRP been able to establish any serious utility beyond simply funding the fintech company’s operations?
The notable use cases of XRP remain far and few between, and although it has been able to find some utility, many investors are still anxiously awaiting Ripple to announce new partnerships that usher in significant transactional volume for the cryptocurrency.
Prominent attorney claims that he believes XRP will ultimately be deemed a security
It’s crystal clear that Ripple and XRP are inextricably intertwined, with Ripple being unable to be cash flow positive without selling the token, and XRP not having any real utility without the partnerships forged by Ripple.
Because of this, Stephen Palley, a prominent blockchain-focused attorney is now noting that he believes it will eventually be deemed a security due to this being a “fundamental truth.”
“My takeaway: if I am a betting man, this Court is eventually – someday, and I don’t know when – going to conclude that XRP is a security and there isn’t a thing that the best lawyers in the world can do to change this fundamental truth.”
This comment comes in reference to a lawsuit that Ripple is currently engaged in within a California federal court regarding the token’s status as a security.
Because Garlinghouse’s latest comments show just how closely tied the embattled cryptocurrency is to Ripple’s operations, it does seem to bolster the claims that it may be a security.
XRP Market Data
At the time of press 9:12 am UTC on Mar. 3, 2020, XRP is ranked #3 by market cap and the price is up 0.88% over the past 24 hours. XRP has a market capitalization of $10.3 billion with a 24-hour trading volume of $2.53 billion. Learn more about XRP ›
Crypto Market Summary
At the time of press 9:12 am UTC on Mar. 3, 2020, the total crypto market is valued at at $251.89 billion with a 24-hour volume of $176.78 billion. Bitcoin dominance is currently at 63.76%. Learn more about the crypto market ›
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The XRP Ledger is a decentralized cryptographic ledger powered by a network of peer-to-peer servers.
Ripple
Ripple is a US-based technology company which develops the Ripple payment protocol and exchange network using XRP, the digital asset native to the XRP Ledger.
Brad Garlinghouse stands at the forefront of financial technology as the CEO of Ripple.