Ripple CEO: Cryptocurrencies Aren’t Currencies, They are Digital Assets
In a surprising turn of events, Ripple CEO Brad Garlinghouse rejected the term "cryptocurrency" even for his own XRP token.
So many bank and government officials have gone on record to say that cryptocurrencies are not actual currencies that it’s become kind of a standard statement.
It is, therefore, surprising to see that Ripple CEO Brad Garlinghouse has joined the fray echoing the same sentiment, even when referring to his own token, XRP.
“I don’t call this cryptocurrency. It’s not currency. I can’t go to Starbucks or Amazon and use—and you know, somebody inevitably will be like, ‘Well, I have one example where I bought something with a bitcoin.’ And then I usually say, ‘Well, did you do a second transaction?’ It’s not actually a currency. These are digital assets. If the asset solves a real problem for the customer, then there’ll be value in the asset,” he said during the Yahoo Finance All Markets Summit.
While others cite wild volatility as a reason why cryptocurrencies are not real currencies, Garlinghouse appears to use the same reasoning that made Steve Wozniak get rid of his entire Bitcoin holdings.
Wozniak was upset that Bitcoin didn’t turn out to be that universal currency he could use while traveling around the world, and instead became a speculative asset that gave him angst every time its price took a turn for better or worse.
Garlinghouse appears to dismiss the idea of Ripple, Bitcoin, and the like being labeled as legitimate cryptocurrencies because a large proportion of people are holding them as speculative investments rather than using them to do commerce.
The research backs this logic up, as over two-thirds of Bitcoin holders haven’t cashed in on their investments back in November.
However, the same could be said about people who hold savings in different fiat currencies.
People may not have illusions about the Euro rising to $20,000 anytime soon, but there are still savings accounts full of them, hoping to cash in on interest generated by lending.
The fact that Bitcoin mostly has speculative value does not necessarily subtract from its potential use as a currency. This is mostly a problem of logistics.
Retailers and other small-margin companies aren’t hopping on the cryptocurrency bandwagon because they have no incentive to risk getting their feet wet in this venture.
As long as this incentive doesn’t exist, there won’t be any incentive for cryptocurrencies to be viewed as more than speculative assets in the near future.
This chicken and egg scenario is common with early technologies that have game-changing potential.
Garlinghouse’s assessment may be true right now, but there’s time for this to turn around as newer cryptocurrencies take Bitcoin’s place.
Dr. Martin Weiss, Founder of Weiss Ratings—the company that gave us the first-ever rating system for the top 70 cryptocurrencies—said about as much when he gave Bitcoin a C+ rating.
He explained that altcoins are now outperforming Bitcoin, a cryptocurrency that he compared to the very first cell phones.
One day, by his logic, the cryptocurrency market will have its “smartphone moment”, by which time retailers might begin to find the prospect of dabbling in this space more attractive.