About that air gap
Garlinghouse went on to explain why XRP could not be considered a security, “A security is something that represents ownership in a company that gives you rights to dividends, gives you rights to governance. XRP and Ripple are two separate things. We have shareholders, we have investors that include Google Ventures, we have banks that have invested their own share of Ripple the company. When you buy XRP, that doesn’t give you any rights to the profits or ownership of Ripple the company. If Ripple the company shutdown tomorrow, the XRP ledger would continue to operate.”
Responding to claims that Ripple maintains a centralized XRP ledger, he said, “People are saying the XRP ledger is centralized. It’s factually not true. The XRP ledger is fully decentralized. Ripple the company cannot control the XRP ledger apart from the fact that you control a handful of nodes. We control, I think, 7% of all of the public nodes on the XRP ledger. In contrast, you have (three) miners in China that control north of 50% of the Bitcoin blockchain. By any measure, the Bitcoin blockchain is more centralized that the XRP ledger. People say Ripple can block a transaction. Not true. Can we rollback a transaction? We actually can’t.”
And the crash…
Addressing concerns about the drop in XRP price, Garlinghouse commented, “18 months ago the entire crypto market was worth $20 billion. Today it’s worth $230 billion. In between it hit about $850 billion. If we drew a straight line from 18 months ago to today you’d say it’s been a huge bull market. There have been in the last five or six years multiple crashes that have been effectively reconsolidation. You’re going to see a separation between those that are purely speculative and those that are actually solving real utility problems in the marketplace.”
Unintended consequences
Arrington shared his thoughts on what will happen if the U.S. continues with their lack of support for the blockchain ecosystem. “I’m Libertarian. I don’t like the government in general. 80-90% of our investments are in Asia, Europe and Israel right now, because they’re actually countries where there’s enough regulatory certainty that entrepreneurs feel safe starting their blockchain companies there. Here they don’t. There’s so much regulatory uncertainty. And then add to that the tax burden and the visa burdens of coming here. And then our current federal government’s stance on immigration in general. They’re just saying f*ck it, and they’re staying in Singapore, Israel and Europe, instead of coming here and starting companies. The SEC needs to get their act together. If they had done that with the Internet in 1994, 1995, none of us would be here. We’d all be living in Shanghai or somewhere else. They’re single-handedly wrecking the stage of technology development.”
Garlinghouse added, “There are unequivocally bad actors in the ICO ecosystem. There have been frauds and massive scams. Hundreds of millions, if not billions, of dollars have been heisted and if anything, I’m surprised the SEC hasn’t been more aggressive going after some of those bad actors. I agree that there is a risk that a lot of this development ends up non-US. The impact on the United States economy for having the Internet that we think of today being very U.S. centric has been very positive for the United States.”