For a period of time now, the prices of cryptocurrencies have been highly influenced by bitcoin – the first and most famous cryptocurrency among thousands. According to Ripple CEO Brad Garlinghouse, this influence may soon come to an end as crypto markets begin to understand the differences between different digital assets.
On CNBC’s “Power Lunch,” Garlinghouse stated:
“There's a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies… It's early, over time you'll see a more rational market and behaviors that reflect that.”
It should be noted that San Francisco-based Ripple is a company that developed a network for faster global financial payments and the XRP token, which financial institutions on Ripple’s network can use to transact quickly.
Garlinghouse stated that Ripple had signed 20 production contracts with new firms in the first quarter. These included the largest bank in Kuwait and MoneyGram. Despite the company’s performance, during said time period its XRP token lost over 80% of its value, making it the worst performing coin among top cryptocurrencies. According to CryptoCompare data, bitcoin lost over 50% of its value during the first quarter, and the entire cryptocurrency market dropped with it.
Garlinghouse added that “this is “still a nascent industry,” in which speculation dominates trading. Per his words, it’s a matter of time until people “better understand the different use cases.” The chief executive officer predicted that about 99 percent of the over 1,500 cryptocurrencies in circulation won’t exist in 10 years as “there’s gonna be a bit of a correction along the way.” This correction, per Garlinghouse, is going to wash out “players in the space that don’t actually solve a real problem.”
The CEO added that while some cryptocurrencies do not have a proven use case, they have been accused of conning investors through initial coin offerings (ICOs). He said:
“The SEC is getting involved as they should because there have been frauds committed. We have been an advocate of yes the government should get involved, the government should be protecting investors and companies but there's also examples of real utility.”
Garlinghouse made it clear that: “If you own XRP, you don’t own rights to the profits or any dividends to the company, [because] XRP has real utility.”