“Just because you own a dollar doesn’t mean you own part of the USA."
Steve Quan of Coingenuis explaining the difference between owning Ripple shares and hodling XRP coins.
Each Wednesday, Coingenius has a conference call called "Genius Wednesday". For Genius Wednesdays they’ve recruited thought leaders from across the industry to join in an open discussion of industry matters. For purposes of disclaimers, I’m one of the recruits. But so is Travis Wright of BadCrypto Podcast, who thinks the Chiefs are going to win the super bowl tomorrow. So not sure how their selection process works, as Travis (like all Cheifs fans) is delusional.
At any rate, Coingenius' mission is to bring science, math and predictability to forecasting cryptocurrency trends. As such, Steve Quan generally kicks off the calls with some analytics and spreadsheets. In a previous Genuis Wednesdy call, we’d chatted about XRP vs Ripple and I gave my standard answer. "XRP is second hand toilet paper." There is some elaboration on that but you get the gist of it. Generally speaking, I am confused why anyone buys #2ndHandToiletPaper. But alas, common sense can’t account for everyone’s preference.
Steve Quan said it better and best. Same sentiment, refined delivery.
"Just because you own a dollar doesn't mean you own part of the USA."
Just because you own XRP doesn’t mean you own any of Ripple, RippeLabs or whatever business entity they’ve been considering bringing to IPO. There is a lot of confusion in the space for participant-investors who bought XRP thinking they were getting into Ripple’s business. Disclaimer - I’m inadvertently hodling a few thousand XRP on Bittrex because Bittrex bittrexed me. However, Ripple’s business isn’t XRP. Ripple’s "business" is money transmitting. You could argue that Ripple’s business is "data transmitting" as all the "money" they transfer is digital/electronic. But that tends to confuse folks even more so let’s stick to Ripple’s business being money transmitting.
- Does Ripple use XRP to do their business? No.
- Does Ripple need/require XRP to successfully execute their business? No.
- Is XRP part of Ripple’s business operations? No.
- Then WTF does XRP have to do with Ripple? Everything and nothing.
Ripple Inc, the business, sold XRP in one of the most successful investment crowdfunding schemes of the last three years. Buyers of XRP helped fund Ripple's business by buying Ripple's blockchain based product, XRP. Now Ripple Inc doesn't use XRP for its business. Ripple sold XRP in their DONATION crowdfunding campaign to fund their business, Ripple Labs. What do people get who donated USD to Ripple in exchange for XRP receive in return? Nothing. Cause they made a donation, not an investment in Ripple, the business. Sort of like if you bought a bunch of digital gummy bears from Haribo. That doesn't mean you own any part of Haribo just that you've got a bunch of digital gummy bears made by Habribo. The funny thing is that the hypothetical Haribo Digital Gummy Bears (HDGBearTokens) are still more valuable (even though 100% imaginary) than the #2ndHandToiletPaper that is XRP. Also, they are gluten, fat and sugar free.
That said, Ripple Inc, the business, is looking good. Ripple has a very promising business model and potential as an international money transmitting business. Using all those #2ndHandToiletPaper donation crowdfunding "participants" money to buy a $50M stake in MoneyGram was a smooth move on Ripple’s part. If you want to get into the international remittance business, buying the MoneyGram brand name is a strong move. Doesn’t add value to XRP tokens/coins/toiletpaper but helps Ripple skip a lot of regulatory headaches.
I guess the moral of this rant is 3 fold:
1. Go Niners!
2. Ripple is off to a great start as a business.
3. You could probably trade your XRP for gently used toilet paper at any public bathroom near you and turn a profit.
As always, this is not investment advice. Just entertaining musings to make you question, "WTF would I buy XRP?" Do your own research. You can lose all your money, get divorced and worse. Be known publically as an XRP holdler and Chiefs fan.
Last thing - Ripple is involved in a class action law suit over their #crowdfunding activities. Because if they didn't sucker all those XRP hodlers into participating in a donations or rewards based crowdfunding scheme, then they issued an unregistered securities in violation of the SEC's JOBS Act Crowdfunding regulations. Either way, and this is where the ironic hilarity really kicks in, XRP participants money will be used to pay their legal bills and fines and they probably won't get anything back themselves.
It’s not hilarious because XRP holders get shafted. It’s hilarious because Ripple took their fiat, gave them a shitcoin and laughed all the way to the bank.
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Thanks for reading my article. If you didn't already know this Coingenius pays me to contribute my insights, antics and perspectives to Coingenius' mission. So please take what I say with a healthy side of skepticism because its probably just compliance best practices and regulatory updates, swaddled in common sense analogies.
You can follow me online at Samson Williams on LinkedIn or @HustleFundBaby. And of course, by joining the Coingenuis ecosystem. If you have a specific question feel free to give me a call at +1-202–642-1660.
Cheers!
