On The Myth About The “New Financial System” And XRP
there are a myriad of reasons why this buyback theory is implausible, but nevertheless, it is sold unreasonably to unreasonable people, who lack the objectivity to see past their hopium-filled dreams.
San Francisco financial center by George Beridze.
By Shawn B
I recently came across a Tweet by Molly Elmore, a self-proclaimed “Analyst focused on the future of money, digital assets, blockchain & geopolitics”. She references a YouTube video of hers, in which she describes the history and merits to the argument that many in the XRP community have parroted, that is, that there is a new financial system budding, the center of which will be the XRP crypto coin. In the Interest of not regurgitating the entire video in text, the link will be posted below – please watch before reading my opinion.
It is clear her belief is in line with the seemingly majority community sentiment, that this is a thing that will happen, evidenced by her response to my tweet that “None of this makes sense.” She responded:
“I agree that it seems crazy if you compare it to other tokens or assets. But it’s clear we are getting a new financial system, which means we are in uncharted water. There is no precedent for any of this (at least in our lifetime).”
– Molly ‘clever hummingbird’ Elmore
I, on the other hand, choose to take a more pragmatic position, since I firmly believe objective logic should included in any sound opinion. My first and most germane question I would love an answer to is “What makes you say it’s “clear” we are getting a new financial system?”
We’ve had multiple global recessions over the most recent decades and despite, none of these have precipitated a major change to the financial system – so what’s so different now? The rationale is all about how, but there’s never a logical reason as to WHY this would be necessary. Of course, it is a matter of fact that the government has bought back gold years ago – that is indisputable – but why would they need to “buy back” XRP when there are so many other viable alternatives?
Just take the escrow!
For example, Ripple has a 50 billion XRP escrow, could they not just negotiate with Ripple to exchange the escrow for what Ripple arguably wants – market dominance? Better yet, why not use eminent domain to just seize the escrow? The answer to those, of course, is they can do either.
The government doesn’t even need all 100b XRP – if this theory were true. In fact, 50 billion XRP at $10,000 per is $500 trillion – more than enough to eviscerate our national debt and tide us over for the next 200 years. At $20,000, $30,000, $40,000, $50,000, well, let’s just call that funny money. So even if they were to do a buyback, why would they need retail XRP? If they did take the escrow in some form, all they would need to do to get to those random valuations is to constrain the US supply – and force global adoption and poof – high price on a digital asset they now own, without having to pay counter rates. This is way cheaper than buying a single XRP for $10,000.
Where would they get the purchase funds from?
Logically, the US has a national debt of $30 trillion, so where would they get $500 trillion to $ 1 quadrillion to buy 50 billion to 100 billion XRP? The stupidity of that notion is alarming. No entity in the world has that cash reserve on standby. If so, will the real GOD BANK please stand up!
Defending the escrow.
Another argument touted is that if the government did try to take the escrow, the XRPL could presumably vote to burn the escrow, thereby making it useless to any government appropriation. The counter argument is, the XRPL is decentralized, so what is to stop the same government from deploying numerous validators to constitute majority votes and then vote to transfer the escrow to the Fed? Why buy when they can just take and squeeze the value up? Furthermore, if they were to do this, then one must legitimately further ask, would there even a need to change the dollar standard? After all, they will be solvent, they will have massive lending power just from the value of their newfound asset. They will be able to bail entire countries out of economic desperation, thereby attaining the power to steer their financial policies and laws. This means they could literally and (arguably) legally force the value of their newly acquired asset to grow by having countries adopt it (with pseudo fiscal policy) – and, again, it would not cost a thing!
These questions are equally applicable to ANY existing blockchain. Alternatively, they could just make their own. Point is, an XRP buyback is one of the dumbest ideas ever. Why buy it when they can just take it? How would they afford to buy it? Why not just build their own blockchain and digital asset?
Ms. Elmore further saw fit to quip: “banks aren’t in the tech business, and it’s not XRP alone that solves their problem. It’s a large exchange with liquidity and tech that has been tested to support payments & settlements.” This, indeed, is true. However, banks and businesses do not act in a vacuum, and neither do governments. So saying they are not tech companies does not equate to an inability to achieve technical feats. I would argue speed is much stronger limiting factor, but NOT their ability to develop a blockchain.
The bottomline.
Bottomline is, there are a myriad of reasons why this buyback theory is implausible, but nevertheless, it is sold unreasonably to unreasonable people, who lack the objectivity to see past their hopium-filled dreams.
