Bitcoin bitcoin bitcoin blockchain, ether. Hopefully that sentence alone will drive 500 visits from Reddit and Twitter! Nowadays, I can't walk 20 feet without overhearing someone talk about cryptocurrency. I, personally, have even gotten a little caught up in the craze. A month ago, I bought $1,500 worth of Litecoin and Ether. Today my account value is nearing $5,000. It's easily the second-best investment I've ever made in my life… (my Toto Washlet Japanese bidet is by FAR #1). Is crypto a bubble? Is it all gonna come crashing down some day? Is the government going to regulate? Everyone seems to have an opinion. But you know what they say about opinions? They're like assholes. Everyone has one… (but mine is cleaner than yours).
Last week something truly incredible happened in the crypto world. And the craziest thing about what happened is that it took ME – a guy who scours the internet for stories about crazy wealth – a week to discover. That's what's so strange about the crypto universe. Everyone is talking about it, but no one really understands it and the media has no idea how to report about it properly.
Here's what happened:
You've no doubt heard of Bitcoin. Maybe you've even heard of Etherum or Litecoin. There so many different coins now and I have no idea what any of them do. One of the most talked about coins in recent times is Ripple. Ripple bills itself as "using blockchain technology to build the payment system of the future". Fans of Ripple will tell you that the coin is much faster and more flexible than Bitcoin at handling financial transactions at a massive scale.
Unlike Bitcoin, Ripple is a pre-mined currency, which means all the coins are already available and owned in the world. Ripple started out with 100 billion coins (Bitcoin will ultimately have 21 million coins after something like 100 years of mining). Of those 100 billion Ripple coins, a large percentage are owned by the founders. These two facts (that they are pre-mined and already majority owned by the founders) makes Ripple somewhat unpopular in Crypto circles. But I digress.
Since the beginning of December the total market value of Ripple soared 1,400% on the hysteria that Ripple (traded as XRP) was about to be the next Bitcoin. In mid-December, Ripple was trading at around $0.27 per coin. On January 4, a single coin topped off at $3.84.
As I mentioned previously, the founders of Ripple control a large percentage of Ripple coins, an estimated 61%. Ripple was co-founded, a guy named Chris Larsen. Larsen owns 17% of the company that created Ripple (the company that controls 61% of all coins). He also owns an additional 5.19 billion XRP as a personal stake.
When you add those assets up, on January 4 Larsen's paper net worth topped $60 billion.
That would be enough to make him the 7th-richest person on the planet behind the likes of Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett… Ahead of people like Larry Page, Carlos Slim, Larry Ellison, Michael Bloomberg…
There's just one challenge – Larsen's $60 billion net worth is largely not liquid. Had he tried to sell even $1 billion worth of his XRP last week, the market would have been flooded with coins and the price would have tanked. That's not to say he couldn't have sold tens of millions of dollars worth of XRP last week. Maybe even $100 million without hurting the price too much. But is there a person on the planet willing to drop $100 million on an unproven coin? Again likely not. So it really as an extremely illiquid paper net worth.
As of this writing, the value of Ripple has declined to around $1.98. At that level, Larsen is still worth around $30 billion. And earlier today it was announced that Ripple was forming a partnership with payment transfer giant MoneyGram. The partnership plans to build a financial liquidity tool for banks using a new service they will call xRapid. This announcement caused shares of MoneyGram to soar 13%. XRP was also up around 2.4%.
Impressive stuff. We'll be keeping an eye on all the Bitcoin and crypto billionaires as they pop up. Check back daily!
Are you gonna buy some Ripple? You know what you should buy instead? A Toto Washlet.