Bitcoin

Ripple CEO Takes Swing at Bitcoin

May 31, 2018

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Ripple (XRP) CEO Brad Garlinghouse has taken a shot across the bow at rival mega-cryptocurrency Bitcoin, calling it the “Napster of digital assets” in late May at Recode’s Code Conference in Rancho Palos Verde, California.

“We may come to find that Bitcoin is kind of the Napster of digital assets,” he said. “This is transformative technology, but Spotify and iTunes and Pandora rule the day because they engaged with regulators to solve a real problem.”

The comparison requires a step back in time. The original Napster, which operated from June 1999 through July 2001, was a peer-to-peer sharing service created by Shawn Fanning.

It was notorious in some circles – namely the circles curated by the Recording Industry Association of America – as a haven for pirates. The RIAA sued Napster in 1999 for facilitating the uploading and transferring of copyrighted materials between users.

Rhapsody acquired Napster in 2011, and Rhapsody recently adopted the Napster name for brand recognition.

Still, the name carries a lot of baggage. In the way Garlinghouse used it, Napster represents a complete lack of interest in playing by the rules – and the failure that goes along with that.

Garlinghouse’s comments highlight the differences between his currency and Bitcoin. Ripple is one of the most centralized cryptocurrencies on the market, and it regularly occupies the top market cap position behind Bitcoin and Ethereum. As of May 2018, Ripple’s market cap was about $24 billion – about a fifth of Bitcoin’s.

Ripple constitutes both the currency XRP and a bank-to-bank payment system. The company has never been shy about its cooperation with the traditional financial world, something Bitcoin was explicitly created to circumvent.

Operating within that framework, instead of wholly outside of it, will likely be the key to widespread adoption, Garlinghouse said.

“People talk about using Bitcoin to buy coffee,” he said. “The average Bitcoin transaction can take as much as 20 minutes. And the transaction cost is going to double the price of your coffee.”

The comments appeared to confuse some participants in Ripple’s forum on Reddit. Recently, Garlinghouse said that he was long on Bitcoin, implying that he believes it has long-term value. The comparison with Napster, on the other hand, seems to imply that he believes it will go by the wayside sooner rather than later.

“What exactly does that mean? That it will be deemed illegal and be shut down?” one forum user asked.

The consensus seems to be that the dig wasn’t really a dig at all. Bitcoin was a tech leader, like Napster. And, like Napster, it has already been surpassed by competing platforms.

“No, Napster was the first of its kind and upset the entertainment industry,” replied one user. “It was the herald of a new era.”

Another user took an even more optimistic tack.

“Probably means he (like everyone should) believes assets can co-exist. Just because XRP succeeds, doesn’t mean Bitcoin has to fail,” the user wrote. “A lot of people in this sub and (additional Reddit forum) r/cryptocurrency seem to believe that only one coin can survive and do well.”