Why does Ripple have to sell XRP every month?
Ripple, a US-based blockchain tech, manages the distribution of the digital token XRP has sometimes been accused of nonselective selloffs of the cryptocurrency it holds. Brad Galinghouse, the CEO of Ripple has also claimed that the Payment Company has no right to control the price of XRP in the market despite the selloffs.
Some of the XRP community members criticized for unaccepting with the rate at which the digital token is being distributed, especially when Ripple unlocks $1 billion XRP at the beginning of the month.
In order to explain Ripple’s stance relating to the monthly distribution of XRP in large numbers, Ripple’s CTO, David Schwartz responded to a question on Quora that states that “If XRP is such a wonderful cryptocurrency, why do the founders keep dumping their supply in exchange for fiat every month?”
David Schwartz’s explanation
In the short response, David Schwartz revealed that XRP Ledger did not apply any form of the competitive process for advancement, meaning that the digital token XRP cannot distribute itself.
He mentioned to the time when launching the XRP Ledger, stating that all 100 billion XRP were stored in a wallet in the genesis ledger. According to him, this wallet lacked sure security, giving the founders the ability to tamper with the wallet for personal benefits.
In the beginning, XRP was set as a giveaway for whoever wished to work with the ledger, but for a very short term. Then, XRP had been recognized as a market price, which makes it salable and people instantly participate in the giveaway in order to derive profit from XRP.
This also caused giveaway spams in order to store all the funds in a single wallet which were put in place by the people to sell the digital token XRP instantly on the open market.
This and other factors seemingly thwarted the strategic giveaway in place. In fact, the best way to get XRP into circulation was to SELL the digital token to the market instead of giving it to the people as a giveaway which only made them sell it in the market for profit.
David Schwartz showed that no XRP player would want a small group of people to control the largest fraction of XRP in circulation forever, leading to the necessity of a sell-off strategy.
He considered a working strategy, instead of selling large amounts of XRP into the market in a small amount, leading to a decreasing price in the economical result that makes the digital currency expensive to hold, and eventually rendered invaluable for payments.
In conclusion, David Swartz said Ripple has quite been obvious about these current strategies and the reasons behind trying them. He said the company will try its best to make its platforms friendly for the people.