Blockchain pioneer and Ripple CEO, Brad Garlinghouse, believes the high correlation that historically exists between the bitcoin price and XRP could end.
The catalyst for that divergence, he suggested to CNBC, is investors understanding the siloed use cases that each project has to offer.
“There’s a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies. It’s early, over time you’ll see a more rational market and behaviors that reflect that,” Garlinghouse told CNBC.
The manner in which Garlinghouse describes the independent use cases for the numerous digital assets resembles that of unique asset classes in the broader financial markets, such as stocks, bonds, commodities, etc. If the bitcoin price performance were to no longer trade in tandem with the broader crypto market, this may suggest that there would be separate asset classes under the cryptocurrency umbrella.
Meanwhile, if you ask Garlinhouse, of the 1,500-plus digital currencies that are being traded, only 1% of them will be around in a decade.
“There’s gonna be a bit of a correction along the way here where a lot of the players in the space that don’t actually solve a real problem are going to get washed out,” Garlinghouse told CNBC.
Garlinghouse is at the helm of blockchain startup Ripple, which owns most of the XRP cryptocurrency and is the No. 3 digital currency by market cap. While altcoins tend to jockey for position, none have been able to knock bitcoin out of its top spot. Some market participants are anticipating No. 2 cryptocurrency Ethereum will do so, an event that’s been dubbed a flippening.
Meanwhile, the first quarter of 2018 was a mixed bag for cross-border payments startup Ripple. The company set new records operationally, but the XRP coin that’s tied to it was sent reeling. XRP lost nearly three-quarters of its value in Q1 2018. The bitcoin price was about halved in Q1.
“It’s still a nascent industry, the speculation in the market dominates the trading activity. I think it’s a matter of time until people better understand the different use cases,” Garlinhouse told CNBC.
On the operational side, Ripple couldn’t have done better. The company signed nearly two dozen first-time production contracts, a record pace for the payments startup. Among its new partners is Islamic lender Kuwait Finance House as CCN previously reported. Ripple inked a partnership with MoneyGram earlier this year in which the remittance company is piloting the payments platform.
Featured image from Flickr.
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Blockchain pioneer and Ripple CEO, Brad Garlinghouse, believes the high correlation that historically exists between […]