Ripple price has been collapsing after this developer announcement

Ripple is a cryptocurrency that was created in 2011, making it one of the first cryptocurrencies. Ripple is completely unlike Bitcoin, however. There is no blockchain for Ripple and no mining involved; instead, it runs on a public ledger of all transactions. Actual currency isn’t exchanged apparently, just debt, and this debt “ripples” through the network. Ripple is honestly confusing to understand and use overall and hasn’t caught on much, even in the cryptocurrency community. Usually, Ripple is only talked about for its extremely high market cap; for most of the past year, Ripple had the second most upper market cap behind Bitcoin. That has finally come to an end.

The distribution of Ripple was extremely centralized. The developers of Ripple decided there would be 100 billion Ripple total. Developers, founders, and investors kept twenty billion Ripple. Eighty billion was given to Ripple Labs, and Ripple Labs intends to save 25 billion. The other 55 billion was supposed to be distributed to users and ‘strategic partners.’

For a while, less than 1 billion Ripple was on the open market. This gave Ripple an incredibly inflated market cap. In December 2013, the market cap of Ripple was $6 billion, which wasn’t far behind Bitcoin at the time. This is because only a small fraction of total Ripple could be traded, while market cap multiples the price per Ripple by the total amount of Ripple (100 billion), even if 99% of Ripple couldn’t be bought or sold.

The Ripple market cap steadily declined through 2014 as more Ripple made its way onto the market, as original investors and developers sold. On May 20, 2014, the market cap of Ripple was down to $670 million, with 7.8 billion Ripple in circulation (still less than 8% of all Ripple).

Earlier today Jed McCaleb, the original developer of Ripple, announced he was going to dump all 9 billion Ripple he owns within two weeks ( https://xrptalk.org/topic/2629-selling-my-xrp/ ). He made the announcement public out of respect for the community. When that 9 billion ripple hits the market, it will more than double the total Ripple on the open market, absolutely crushing the price.

Even though Jed hasn’t dumped his Ripple stockpile yet, a panic sell-off is underway. The price of Ripple has declined over 60% today, and is now at $0.0025 per Ripple, as compared to $0.06 per Ripple in December 2013. The market cap of Ripple is currently at $250 million, which is an all-time low.

This sell-off will likely continue, and then get much worse when Jed sells his 9 billion Ripple in 2 weeks. Undoubtedly other big holders will sell most of their Ripple too since their investment is going up in flames by the minute. The market cap of Ripple could smoothly go below $100 million, perhaps even $10 million.

The collapse of Ripple that we’re witnessing in real-time is a lesson in why cryptocurrencies need to be decentralized. The fact that a few people owned most of the Ripple has led to its demise; it only took one person to decide to sell all of his Ripple to ruin the market utterly. For a cryptocurrency to work, it must be distributed equitably among a large number of people.