Ripple CEO Brad Garlinghouse caused some, well…ripples, in the cryptocurrency and altcoin sphere by calling out bitcoin. Labeling it as a necessary failure, bitcoin’s main accomplishment was to catalyze the concept of the blockchain and virtual currencies. The altcoin tokens will take it from here.
Garlinghouse has a point, but he’s also barking up the wrong tree. Comparing bitcoin to the long-defunct music-sharing platform Napster, the Ripple CEO credits the original cryptocurrency for bringing a revolutionary idea to fruition. At the latest Code Conference hosted by Recode, Garlinghouse stated:
We may come to find that bitcoin is kind of the Napster of digital assets. This is transformative technology, but Spotify and iTunes and Pandora rule the day because they engaged with regulators to solve a real problem.
The Ripple chief further criticized bitcoin’s inability to act as a “real” currency. Due to network overflooding, long transaction times, and soaring usage fees, bitcoin just isn’t practical in the way that most other altcoin assets are. He said:
People talk about using bitcoin to buy coffee. The average bitcoin transaction can take as much as 20 minutes. And the transaction cost is going to double the price of your coffee.
I can imagine that Garlinghouse will face significant opposition from not only bitcoin proponents, but even altcoin investors. Say what you want about bitcoin, it is the pioneer in a radically paradigm-shattering industry. There is simply no innovation quite like the blockchain and more specifically, cryptocurrencies.
As a result, nearly all altcoin tokens track the bitcoin price. Logically, if bitcoin collapses and fails, it could spark an intractable panic in the entire altcoin market.
The second criticism is that Garlinghouse has a huge conflict of interest. Of course, he’s going to promote his Ripple altcoin. But most blockchain users and investors will counter that Garlinghouse can demonstrate some class by marketing Ripple without impugning bitcoin.
But the biggest criticism has got to be that Ripple has actively sought the mainstream society’s approval, specifically, the big banks and financial institutions. The problem, of course, is that these institutions are anathema to the entire concept of virtual currencies.
Moreover, Garlinghouse misses the broader point regarding bitcoin. Of course, you’re not going to use bitcoin to buy a cup of coffee. But neither would you use a gold brick to buy coffee! Yet that doesn’t impugn gold’s status as a choice safe-haven asset.
The same can easily be said about bitcoin, which leads me to suspect that Garlinghouse was merely trying to get a cheap shot in to boost Ripple.