The question of whether Ripple can be considered a true cryptocurrency has been a topic for heated debate in the crypto community, but now new research has confirmed that Ripple is more centralized than the industry realized.
Ripple’s official position as being a cryptocurrency, a decentralized currency, has been a matter of contention ever since its establishment in 2012. Those opposing Ripple have argued for years that the company’s administrators demonstrate an alarming amount of control over transactions, which advocates and the company itself have vehemently denied. However, a new report, authored by Bitmex Research, confirms that Ripple and the company behind it are more centralized than the crypto community realized.
Bitmex’s investigation
Bitmex Research is a respected institution in its field, whose independent findings carry a significant weight and integrity to it. Its blog is operated by the Bitmex cryptocurrency exchange, which is notorious for its 100x leverage. The Bitmex blog has so far managed to set itself apart from the average cryptocurrency blog.
Instead of focusing on current events and news related to the industry, they write thoughtful pieces that are backed by thorough research. This has ensured that the Bitmex Blog has established itself as an authority on all things crypto. So when they publish, the crypto world pays attention, and the community picked up their piece early this week entitled The Ripple Story.
The article is academic in its scope, style, and attention to detail, and discusses Ripple’s history with thorough, forensic research.
The entire report is undeniably interesting, however, the part that sparked debate is that which discusses Ripple’s centralization. Previously, there have been various reports stating that Ripple had the power to freeze their users’ funds, despite Ripple’s cryptographer, David Schwartz’s vehement denial on the subject.
The report states that the company feature known as Ripple freeze was introduced during August 2014 and was operational by 2015. The Bitstamp gateway successfully froze a relation of Jed McCaleb out of their Ripple funds. This is an ironic turn of events as Ripple initially claimed that they introduced gateways to make it easier to be compliant with regulation. However, as the Bitmex report shows, the very first order was issued by the company itself against one of Ripple’s very own founders.
This information is already publicly available. The public is also theoretically aware that Ripple’s 32,000 initial block headers were missing from the Ripple ledger, making it impossible to conduct a comprehensive audit of the company since its creation of 100 billion XRP. In the fast-paced crypto industry, this is old news. Thanks to Bitmex’s detailed report, the public now has an accurate and detailed account which does an excellent job of tracing the company’s entire history, something which has, up until recently, borne resemblances to a Franz Kafka novel.
New information which confirms Ripple’s centralization
Interestingly, the report contained new information that was never before revealed to the public regarding the extent of Ripple’s centralization. For research purposes, the Bitmex Research team ran the Rippled software and discovered that the Ripple node was only operated by five public keys from a single server, v1.ripple.com. Furthermore, all keys were attributed to ripple.com. In addition, the software suggests that four of the five keys need to support a proposal before it can be accepted.
This part of the report confirms that Ripple has complete control of its ledger system, suggesting that the system is centralized.
While the report does acknowledge the many benefits of a centralized system, the fact remains that in light of this new information, Ripple’s marketing and advertising has been somewhat misleading. The company’s chief cryptographer immediately sought to provide clarity, but we are yet to receive a response from the company itself.
The authors of the Bitmex blog post pointed out a peculiarity, that the usually vocal crypto community has remained so ominously silent about Ripple. Perhaps Ripple simply doesn’t rate high on the crypto enthusiast’s radar, while the real market in danger here is crypto newbies.
It is encouraging to know that there are people such as the Bitmex Research team to hold companies accountable.
