Ethereum (Ether) has solidified its position as the second most valuable cryptocurrency in the market as it overtook Ripple (XRP)…
Ethereum (Ether) has solidified its position as the second most valuable cryptocurrency in the market as it overtook Ripple (XRP) by a staggering $60 billion within a five-day period.
Since January 4, the market valuation of Ripple decreased from $148 billion to $73 billion, falling by nearly 2-fold in a single week. On the contrary, the market valuation of Ethereum surged from $85 billion to $135 billion, recording yet another 15 percent increase in value today, on January 10.
The recent surge in the price of Ethereum can be largely attributed to the sell-off of XRP, which was likely triggered by the market’s concerns over the sudden spike in the market valuation of Ripple. The harsh criticism of Ripple by analysts such as ConsenSys entrepreneur-in-residence Ryan Selkis could also have led to the decline in confidence towards Ripple.
On December 29, Selkis noted that the majority of Ripple’s partner banks are not actually utilizing the Ripple network to process billions of dollars on a regular basis. Given that the transaction volume of Ripple and its network of banks can be only two factors that could possibly justify its market cap, the market’s interest in Ripple decreased in the short-term.
“Per a source at one of the major banks re XRP: ‘I know of no banks that are a) using it, or b) would touch it in any way as it is controlled by a SV company and 20% of all XRP in existence were taken by the founders.
The product that Ripple are offering to banks is simply a point-to-point messaging tool with some smart cryptography underneath to ensure that transactions are atomic. The liquidity model used is the same as correspondent banking.”
In response to the criticism of Selkis and Nathaniel Poppers of The New York Times that banks are not utilizing the Ripple network to settle large volumes of transactions, Ripple CEO Brad Garlinghouse firmly stated that there are several banks regularly using the xRapid platform of Ripple to process payments at a large-scale.
“Over the last few months I’ve spoken with actual banks and payment providers. They are indeed planning to use xRapid (our XRP liquidity product) in a serious way. This is a sampling of what I heard:
Still, regardless of the statement of Garlinghouse, the value of Ripple has fallen drastically over the past week and as a consequence, Ethereum has benefited from the shift in interest from XRP to the rest of the cryptocurrency market.
Ethereum remains as one of the few blockchain networks that has a justifiable market valuation. Decentralized applications building on top of Ethereum such as CryptoKitties, 0x, EtherDelta, Status, and OmiseGo have obtained a large user base of actual users that process hundreds of thousands of transactions on a daily basis.
In the short-term, it is likely that the upward price trend of Ether will continue, as decentralized applications on the network perform well.
Featured image from Shutterstock.