Ripple — the company with the largest XRP holdings — fulfilled its promise to lock up 55 billion XRP from its 61.68 billion supply into a crypto-based escrow account. The goal is to foster supply predictability for XRP.
Recently, many crypto investors have expressed concern over the lopsided XRP distribution in the market.
The reason for doubt specifically arose due to Ripple’s XRP holdings providing the company with a competitive advantage. This dynamic was contrary to the space’s key principle of decentralization, according to which an individual or organization shouldn’t own an overly-significant portion of their own cryptocurrency.
Indeed, if Ripple had sold all of its 61.68 billion XRP at once, it could’ve upheaved the supply chain causing a major price drop.
On May 16th , 2017, Ripple CEO Brad Garlinghouse had addressed the ongoing concern in the market:
“Today we are permanently removing that uncertainty by committing to place 55 billion XRP into a cryptographically-secure escrow account by end of 2017.”
And now, as of December 7th, 2017, the Ripple team has officially finalized the escrow lockup.
Ripple has locked up 55 billion XRP into 55 contracts of 1 billion XRP. So, the contract will expire on the first day of the month through 54 months.
Once a contract expires, the particular amount of digital asset will be available for Ripple’s use. At the end of the month, the unused portion from the 1 billion XRP will reenter the escrow circle. The unspent digital asset will be placed into a new escrow account that will expire in the 55th month from that date.
The idea is to assure XRP investors that the company will never flood the marketplace for personal gain.
According to Spencer Bogart, Head of Research at Blockchain Capital, “The lockup provides a level of predictability about XRP supply that is favorable for market demand.”
Over time, Ripple’s XRP digital asset has grown exponentially by volume and market capitalization due to its notable acceptance in financial institutions such as banks. The members of the Ripple network now include heavyweights like TransferGO, Cuallix, and Rakbank.
XRP is faster and more cost-effectivewhen compared to Bitcoin. Per the aforementioned Garlinghouse, the cryptocurrency has a “clear use case” and is most suitable for payments.
In the past, Garlinghouse stated that the company aims to strengthen the whole XRP ecosystem:
“We engage in distribution strategies that we expect will result in a strengthening XRP exchange rate against other currencies. We have a proven track record of doing just that.”
With this new escrow plan and a bold roadmap for the future, the Ripple team are looking better positioned than ever.
Do you think the Ripple Escrow makes the cryptocurrency more trustworthy? Let us know your views in comments section below.
Images via Shuttershock, Forbes