Michael Arrington, prominent tech figure and founder of TechCrunch, announced earlier this week the launching of a new cryptocurrency hedge fund.
But in contrast to most hedge fund startups in the cryptospace, Arrington’s fund will not be denominated in US Dollars or Euros. In fact, it won’t be denominated in fiat currency at all.
Instead, it will be denominated in XRP—a digital currency that crypto-enthusiasts synonymously refer to as “Ripple.” For those of you who are not familiar with XRP, it is the digital token associated with the Ripple protocol. A somewhat radical turn in a 68-year old industry, this fund extends its denominative requirements to include all of its limited partners (LP’s), requiring them to invest in XRP.
The fund is launched under a newly created entity, Arrington XRP Capital, and is currently looking to raise $100 million for distribution across various crypto assets—constituting the fund’s primary holdings–and investments in ICO sales (initial coin offerings), and to a minimal extent, the equities and debt of startups in the crypto-space.
The new fund has made some headway, having raised 50% of its capital target.
Arrington has said that much of the investment capital is comprised of investors who have already entered (and successfully profited from) the cryptomarkets; investors looking to further diversify into other digital assets. Arrington himself claims to have 10% of his net worth in cryptocurrency, perhaps implying that others too may have similar progressive views toward digital wealth; affirming a perspective that cryptocurrencies constitute not just a short-term speculative object, but a long-term economic phenomenon.
Despite Bitcoin’s sky-high valuations and the massive surge across various cryptocurrencies—all of which may arguably scream “bubble”—Arrington holds firm in his belief that in the larger scheme of things, the crypomarkets have just begun:
“‘This is the time for everyone to get the hell out of cryptocurrencies!,’ many people argue, ‘Not jump in with both feet.’ Others, however, argue that we’re just getting started in crypto. I’m one of those people.”
So what is XRP, Ripple; and what’s the difference?
It’s important to note that most cryptocurrencies unfold across two distinct yet related spheres: the economic sphere in which we view its price valuations and monetary potential; and the technological sphere in which we can assess its commercial functionalities and applicability.
Viewing it from this light, Ripple is both a transaction protocol (a real-time gross settlement system) used by institutions in banking and various commercial industries AND a digital currency.
As a transaction protocol, Ripple was designed for the instantaneous and direct transfer of funds between parties and for the exchange of any currency, be it fiat currency, precious metals assets, and even airline miles.
As a cryptocurrency, XRP’s technological apparatus is similar to Bitcoin (and blockchain) but with a few notable differences. Among the more commonly known differences:
- No mining process: unlike Bitcoin, Ripple XRPs are issued by Ripple Labs. They plan to create a total of 100 billion XRP tokens in existence (total value estimated at $26 billion as reported by CNBC), and all are freely tradeable. Transactions are verified by consensus across the network of users.
- Transaction speed: it takes 4 seconds to authorize a Ripple transaction; a rate significantly faster than Bitcoin’s.
- Scalability: XRPs are capable of facilitating up to 1,500 transactions per second, 24/7. This is 250 more than Bitcoin’s load capacity, and 100 times more than what Ether can handle.
- Exchanges are decentralized: To buy Bitcoin and other digital currencies, you must open an account with an exchange; and exchanges can crash. In contrast, XRPs can be bought or sold on its own network.
- Information tracking capabilities: the Bitcoin network is more or less limited to tracking the movement of coins, whereas Ripple can track any kind of information (e.g. account balance).
Support and Resistance:
At the time of this writing, Ripple is trading at $0.24.
- Resistance is at $0.2698
- Support is at around $0.1968
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