Ripple’s XRP Is The Only “Battle-Tested” Cryptocurrency, Says Head Of Japanese Financial Giant SBI Group

Omar Faridi
  • SBI Group CEO Yoshitaka Kitao, who also leads SBI Ripple Asia, stated that Ripple’s XRP token is scalable and will become the global standard for cryptocurrencies and fiat money.
  • Kitao has also said that “Bitcoin is too expensive” and that it’s just a speculative asset people are holding, while “hoping it will increase in value.”

Yoshitaka Kitao, CEO of Strategic Business Innovator Group (SBI), a giant financial services firm based in Japan, recently stated at a Blockchain event that he’s hoping Ripple company’s XRP cryptocurrency becomes the world’s standard of digital currency and fiat money. While speaking at the “Japan Blockchain Conference”, the SBI Holding chairman praised blockchain technology and predicted that it would continue to sustain its fast growth and adoption rate. Kitao added that blockchain would be instrumental in transforming the global financial system.

The SBI CEO further noted that Ripple’s XRP cryptocurrency is quite efficient in processing cross-border transactions, and that it will lead to a more reliable and cost-effective financial system. Moreover, Kitao said that the typical issues related with international payments processing using the traditional banking system could be resolved by utilizing XRP. Notably, the SBI chairman has reportedly been following the development of Ripple’s suite of financial products since January, 2016. This was well before the XRP token’s market capitalization reached record level highs in December, 2017, briefly surpassing $50 billion according to data from CryptoCompare.

“Battle-Tested” Cryptocurrency

Kitao, who’s experienced the crypto market’s highs and lows, remarked that XRP is the only technology that has been “battle-tested”, while also saying that the cryptocurrency will give added support to the existing banking infrastructure. The Japanese businessman stated, “Surveying the market, Ripple was the only company that has delivered battle-tested enterprise solutions and global bank customer traction, including commercial deals with top banks already signed in Asia Pacific. Distributed financial technology is undoubtedly transforming financial infrastructure and we’re excited to drive its adoption throughout Asia,”

Kitao is one of the main partners at Ripple company and has always been a strong supporter of cryptocurrencies and blockchain technology. His association with Ripple dates back to May 2016 and the SBI Group has been working closely with the creators of XRP through a joint initiative called SBI Ripple Asia. Japan, which has the world’s third highest GDP of nearly $5 trillion, has been leading the charge when it comes to adopting blockchain technology and cryptocurrencies.

“Real Life” Use Cases

Commenting on the various use cases for blockchain, Kitao said, “We want to take blockchain beyond financial. There’s a lot of speculative demand around cryptocurrencies, which is why the price is going up so quickly, but people need to think about how these technologies are being used in real life and how they can improve people’s businesses.”

In previous interviews, the SBI chair has stated that not only is XRP the ideal digital currency for payments, but also more recently that Bitcoin (BTC) is too costly and that “people are just holding it and hoping it will increase in value.” While criticizing bitcoin at the Japan Blockchain Conference, the flagship cryptocurrency along with Bitcoin Cash (BCH) and Ripple (XRP) are all listed on SBI Virtual Currencies [SBI VC], the financial giant’s own crypto exchange, which launched in early June, 2018.

'Important Discrepancies' Were Reportedly Found in Ripple's XRP Release Schedule

Omar Faridi

Coin Metrics, a cryptocurrency financial data provider that compiles “hard-to-acquire” data for large blockchain platforms, has revealed that it discovered several major inconsistencies in its recent evaluation of XRP’s supply schedule and escrow system.

As detailed in an official report published on May 16, 2019, on Coin Metrics’ website, the data provider found that two quarterly market reports, released by American fintech Ripple Labs, the developer of XRP, had inaccurately reported the number of XRP taken from escrow.

Notably, Coin Metrics’ investigation found that Ripple had “under-reported” the XRP released from escrow by “a total of 200 million XRP,” an amount valued at around $84 million at current prices.

"A Faster Future Release Of Escrowed Funds"

Other irregularities found by Coin Metrics’ researchers showed that the “escrow queue” had been implemented in a manner that was noticeably different than what Ripple Labs’ management had announced. According to the firm, the actual escrow queue used “led to a faster future release of escrowed funds” than what the announced schedule appeared to suggest.

Additionally, the Coin Metrics team learned that other parties, which may have been associated with the management at San Francisco-based Ripple Labs, could have taken out around 55 million XRP from an “unknown escrow address.” This address, it noted, may have not been directly “connected to the main Ripple escrow account.”

Coin Metrics’ report pointed out that in late March 2017, Ripple Labs’ management stated: 

Escrow allows XRP Ledger and ILP [Interledger Protocol] to communicate to secure XRP for an allotted amount of time or until certain conditions are met. This can be used to hold funds until a service is completed, or until a moment in time such as a birthday.

Investors Can “Mathematically Verify” XRP Introduced To Markets?

In a blog post published on Ripple’s website, by its CEO Brad Garlinghouse, on May 16, 2017, it was noted that the US-based fintech firm was “committing to place 55 billion XRP” into its escrow account by the end of the year (2017).

This, Ripple’s post explained, would be done in order to “permanently remove uncertainty” regarding the amount of funds held by Ripple Labs. The blog post further mentioned that by securing the majority share of XRP tokens, investors would be able to “mathematically verify” the total XRP supply that has entered the market.

It further stated that whatever XRP was not used out of the total 1 billion unlocked each month would be placed back in escrow.

As noted by Ripple Labs:

We’ll use Escrow to establish 55 contracts of 1 billion XRP each that will expire on the first day of every month from months 0 to 54. […] We’ll then return whatever is unused at the end of each month to the back of the escrow queue. For example, if 500M XRP remain unspent at the end of the first month, those 500M XRP will be placed into a new escrow account set to expire in month 55.

25 Contracts Of 1 Billion XRP, Not “55 Contracts Of 1 Billion XRP” As Announced

What this meant was that Ripple would not be able to “sell more than 1 billion XRP” each month for “at least the next four and a half years,” Coin Metrics’ blog explained.

On-chain data (from the XRP ledger) indicates that 55 billion XRP were placed in escrow on December 16, 2016, Coin Metrics wrote. Notably, Coin Metrics’ research team found that although Ripple’s announcement stated that “55 contracts of 1 billion XRP” would be put in escrow, there were actually 25 contracts of 1 billion XRP.

These were set to expire monthly “from January 2018 to January 2020 and another 60 contracts of 500 million XRP each with two expiring at the beginning of each month from February 2020 to July 2022,” Coin Metrics’ report revealed.

"Misreporting" Number Of XRP Placed In Escrow

When Coin Metrics released its report, there were reportedly 17 escrow contracts that had been redeemed and an additional 43 which had been issued. In total, there was 17 billion XRP which had been taken from escrow and 13.2 billion XRP placed back in escrow accounts, meaning a total of 3.8 billion XRP had been released.

According to the firm’s research, which is based on an analysis of two reports, Q3 2018 and Q1 2019, Ripple Labs’ management has “misreported” the number of XRP it placed in its escrow system. Data from both Q3 2018 and Q1 2019 reports shows that XRP transferred to escrow was “over-reported” by 100 million XRP. This effectively “under-reported” the total XRP released, Coin Metrics’ report stated.

On-Chain Data Shows Announced Release Schedule Not Consistent 

One of the assumptions made by Coin Metrics’ researchers is that “any XRP unlocked but unused at the end of month n would end up being escrowed until month n + 55 — i.e., unused XRP would move to the back of the escrow queue.” The crypto data provider noted that it made the assumption after reviewing documentation related to Ripple’s escrow system, which states that the fintech firm will “return whatever is unused at the end of each month to the back of the escrow queue.”

On-chain data obtained from the XRP ledger suggests otherwise, Coin Metrics’ team claims, as “instead of locking unused funds into the first slot (i.e., the first month) with no existing escrow, they were locked in such a way to maintain the fixed amount of 1 billion XRP in escrow per month.”

Coin Metrics’ report further mentioned that on January 6, 2018, the “beginning of month 0,” Ripple released the “first escrow of 1 billion XRP”, and “locked back 900 million XRP for month 55, as expected” towards the end of January 2018.

Significantly "Accelerated" XRP Release Schedule

In February 2018, which would be “month 1” according to Ripple’s release schedule, the American fintech firm “unlocked another 1 billion XRP and used 100 million of it.” Notably, Coin Metrics found that “instead of locking another 900 million XRP in month 56 (September 2022), the first month in which no escrow was scheduled to release, the remaining 900 million were escrowed in two different contracts.”

According to it, one of these contracts was for 100 million XRP which would expire “on month 55, putting the XRP escrowed for that month at 1 billion XRP, and another one of 800 million XRP expiring on month 56.”

As noted in Coin Metrics’ report, month 55 had “previously been designated” as a time period during which “an escrow would be released.” One of the conclusions drawn by Coin Metrics’ team from this type of release of XRP tokens is that:

[Ripple's] modified [XRP release] scheme has in effect accelerated the release schedule of XRP, compared to the strict escrow scheme as was understood by the majority of news outlets and analysts at the time it was reported and as illustrated in Ripple’s examples of how the scheme works.