update 24 November 2021

Ripple CEO Calls DOGE Inflationary – While Ripple’s Inflation May Have Reached 20%

Ripple CEO took a shot at a competing crypto – the famous meme coin DOGE. He said he wouldn’t hold it due to its inflationary nature. However, one research firm showed that Ripple’s inflation rate reached 20% last year.

Brad Garlinghouse, the CEO of Ripple Labs, took a shot at Dogecoin due to its alleged inflationary nature.

“I am not convinced, somewhat controversially, I guess, that dogecoin is good for the crypto market,” he said.

DOGE is the giant meme coin by market cap and the first among the popular doge-themed cryptos. The coin was first designed as a joke. Its high inflation rate is a built-in feature to cap the meme coin’s valuation.

“It was built as a joke, and then it got some momentum from some high-profile people like Elon Musk,” he said.

Due to the support from the CEO of Tesla and SpaceX, DOGE did jump to highs considered impossible. As a result, the meme coin reached an all-time high of $0.7376 in May 2021. Currently, it is trading at $0.2293.

“Dogecoin has some inflationary dynamics itself that would make me reluctant to hold it,” Garlinghouse added.

Unlike most other currencies, DOGE does not have a hard limit on the total supply. As a result, its inflation rate is currently 3.85%, which beats the U.S. dollar. However, Dogecoin’s inflation rate still goes down in time, dropping below 3% in 2030.

Ripple’s Inflation At 20%?

Interestingly, Ripple’s native XRP token has also shown a high inflation rate, according to a research firm Messari. They claimed that XRP’s circulating supply rose by 20.5% in early 2020. That number dwarfs Dogecoin’s inflation numbers. However, those numbers are different.

The 20% inflation does not come from the code in the blockchain. Instead, Messari argued that this was due to Ripple Labs, the company, steadily selling many tokens. At the time, XRP dropped 47%.

Ripple reached an all-time high of $3.40 in July 2018. It has since dropped 95%.

The difference between the circulating supply and the total supply is rather significant. This is because only coins that circulate in the market can affect the price. Coins that users hold in wallets don’t affect the price, only those that they sell do. So if Ripple Labs had born the cash, the circulating supply would have stayed the same.

Ripple, on the other hand, denied that its sales had any tangible effect on the market.

“In the XRP community, Ripple is the largest owner, and we are the most interested party in the success of the XRP ecosystem […] Ripple can’t control the price of XRP anymore than a whale controls the price of Bitcoin,” they said.

What is more, the coin sale prompted the U.S. Securities and Exchange Commission to step in. They charged two executives for conducting a $1.3 billion unregistered securities offering. Ripple disputed the case, claiming that XRP should not be considered a security.  

Fiat Inflation Boosting Crypto

In his interview, Garlinghouse further argued that high inflation rates of fiat currencies are helping crypto.

“We’re seeing inflation that we haven’t seen in decades,” he said.

He went on to say that rising inflation helped Bitcoin become a popular inflation hedge. Institutional investors have shown greater interest in Bitcoin over the past few weeks. That was just as the king crypto was reaching its all-time high of $69,000. Bitcoin has since dropped to $57,000. However, it still outperformed gold.

“When people are concerned about holding a fiat currency that might be inflating, and that’s devaluing, they’re looking at: ‘How can I hold other assets that won’t have that same inflationary dynamic?” he said.

Ripple works as a global payment settlement system. The network helps facilitate remittances across multiple countries, including Thailand, Pakistan and UAE.

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While most cryptos mostly rely on demand from crypto investors, Ripple focuses on major global financial institutions. The company is currently expanding in the Middle East and, to that end, opening an office in Dubai where they plan to employ 250 people.