Brad Garlinghouse, CEO of Ripple (the company) has spoken about breaking bitcoin’s hold on prices in the wider cryptocurrency markets.
As analysts continue to search for a way to both predict the machinations of the cryptocurrency markets, and Bitcoin et al‘s effect on other financial indicators such as the stock market, Ripple (the company) CEO Brad Garlinghouse is claiming that the world’s first – and still number 1 – crypto could soon lose its influence over the price of other cryptocurrencies.
It’s a widely accepted truism that, when Bitcoin rises in price it drags up the value of other cryptocurrencies – certainly the major ones – with it. However, Garlinghouse – interviewed by CNBC – believes that “over time you’ll see a more rational market and behaviors that reflect that.”
He believes that Bitcoin’s tether to the price of other coins, such as Ripple (the coin – XRP) – which Ripple (the company) created but insists is independent despite hodling a massive cache of the crypto in its coffers – will be broken as investors, and the wider public, begin to better understand the differing methodologies and use cases for the massive range of coins and Altcoins out there – though he thinks there is going to be a reckoning that brings that reduces that number somewhere down the line.
“There’s a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies,” Garlinghouse told the channel’s Power Lunch show. “It’s still a nascent industry, the speculation in the market dominates the trading activity,” he added, before concluding that “there’s gonna be a bit of a correction along the way here where a lot of the players in the space that don’t actually solve a real problem are going to get washed out.”
Garlinghouse obviously believes that the Ripple (the company) back-end blockchain tech, which is already widely used by banks, and has recently begun to creep into consumer-facing products and sought to court the attention of the wider public, is well placed to avoid his predicted cull – which means Ripple (the coin) will survive too. Ripple (the company) has, according to the report, signed something like 20 production contracts with new firms in recent months – including the Kuwait’s largest bank and money-transfer company, MoneyGram.
With this appeal to Fintech firms and large banks, it’s unsurprising that Ripple (the company) and Garlinghouse have been keen to stress the need for better regulation of the sector, in order to court more investment – and ensure confidence that, at the very least, ICOs aren’t defrauding people. That is despite the fact that Ripple (the company) has attracted the interest of regulators, due to the control it exercises of Ripple (the coin), due to its reserve.
“The SEC is getting involved as they should because there have been frauds committed,” Garlinghouse said. “We have been an advocate of yes the government should get involved, the government should be protecting investors and companies but there’s also examples of real utility.”
He went on to stress the difference between XRP and a stock or share, by emphasising its utility, a key element of defeating the Howey Test for what defines a Security, and thus would put a coin under the purview of the Securities and Exchange Commission in the US.
“If you own XRP, you don’t own rights to the profits or any dividends to the company,” he said. “XRP has real utility.”
Of course, not everyone shares Garlinghouse’s view on that.