Coinmotion Alleges Ripple is Centralized Token Days After Listing It


Coinmotion, a Finnish exchange, has published an “expose” of sorts on Ripple that talks about all the ways in which it is centralized. All of this comes mere days after they listed XRP on their exchange.

In a world plagued with controversy, aggressive debates, and ideogues, Ripple may be the most contentious cryptocurrency of all. The number of threats and heated discussions around the company are inestimable and it has become hard to differentiate between fact and fiction. But the fact that Coinmotion isn’t just another Internet troll, and is a party that actually stands to lose a bit by publishing their blog post, does make this seem more than your standard FUD.

Coinmotion’s Claims

None of the claims are “new”, but they show the sharp contrast between Ripple’s XRP and a true cryptocurrency like Bitcoin. The first claim, as always, is that Ripple is a payment network and not a cryptocurrency. XRP acts as a virtual currency to facilitate exchange on the network, and that’s where it gets its utility from. So far, this all sounds fairly innocent.

Where the trouble comes is with this claim:

What differentiates XRP from cryptocurrencies is that it is not based on blockchain, it is not mined and it is heavily centralized. Ripple network is a suite of different applications by Ripple Labs.

This is a claim you would have to do your own research on, but Coinmotion is definitely not the first person to say it. The next big issue is the management of supply for XRP. Rather than having an algorithm that mints it at a constant rate, XRP’s distribution is controlled by Ripple. They release (sell) XRP when they want to increase the supply, and keep the rest of the currency in inventory.

Sure sounds like a monopoly! All of these criticisms can be banded under the single claim that Ripple controls XRP, so it therefore lacks the decentralization that is meant to make cryptocurrencies so powerful.

The Other Side

Ripple’s CEO, Brad Garlinghouse, has repeatedly defended against these points, stating he had no control of Ripple’s ledger and it was clearly decentralized. The fact is, these are nuanced points that require personal research to conclude one way or the other.

The flip side of these accusations is XRP and Ripple still represent a significant advancement in financial technology. PayPal isn’t a cryptocurrency or blockchain, yet has changed the way people do business. Why couldn’t Ripple do the same?

Strategic Implications

The marketing aspect of this is quite strong. It creates controversy around the company, which can then be monetized as numerous media outlets pick it up and discuss it. At the same time, they are establishing trust with their customers who will appreciate the fact that Coinmotion went out of their way to highlight certain fundamental issues.

Perhaps the best part of the whole blog post was how they finished it with the sentence, “Nonetheless since You, our dear customer, have asked for it, we have offered you the possibility to buy and sell XRP on Coinmotion.” In a way, this is the most honorable form of capitalism there is. They have said their piece and not let there be any misconceptions, but also positioned themselves to benefit from the trading of the XRP.

Leave a Reply

Notify of

Risk Warning: Investing in digital currencies, stocks, shares and other securities, commodities, currencies and other derivative investment products (e.g. contracts for difference (“CFDs”) is speculative and carries a high level of risk. Each investment is unique and involves unique risks.

CFDs and other derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how an investment works and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can fluctuate widely in prices and are, therefore, not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Past performance does not guarantee future results. Any trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions. Your capital is at risk.

When trading in stocks your capital is at risk.

Past performance is not an indication of future results. Trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions. Prices may go down as well as up, prices can fluctuate widely, you may be exposed to currency exchange rate fluctuations and you may lose all of or more than the amount you invest. Investing is not suitable for everyone; ensure that you have fully understood the risks and legalities involved. If you are unsure, seek independent financial, legal, tax and/or accounting advice. This website does not provide investment, financial, legal, tax or accounting advice. Some links are affiliate links. For more information please read our full risk warning and disclaimer.