Ripple Case Study (Part 2 Who) – Understanding What, Who, Why, When, and How

Sorry for the delayed post. I’ve been dealing with the bad case of the flu and have been mostly bedridden. I admit, this was a pretty bad one but I’m back on the mend. Anyways, to continue on my Ripple research….. onto Part 2. Who.

In my last post, I’ve tried to summarize/highlight what I think is Ripple? Now I have to answer who? Who are the players? Are there many? Its good to know who you’re playing against.

Note some of the below bullets were collected from various sources that you could easily find yourself, but I’m just summarizing what I’ve uncovered.

Who Summary:
• Ripple originally named Opencoin and renamed Ripple Labs in 2015, the company was founded in 2012 and is based in San Francisco, California.
• In May 2011, Jed McCaleb began developing a digital currency system in which transactions were verified by consensus among members of the network, rather than by the mining process used by Bitcoin. (read: there is no MINING)
• In August 2012, Jed McCaleb hired Chris Larsen and they approached Ryan Fugger with their digital currency idea. After discussions with McCaleb and long-standing members of the Ripple community, Fugger handed over the reins. (Ryan had a competing project within the Ripple community)
• In September 2012, Chris Larsen and Jed McCaleb co-founded the corporation OpenCoin.
• In July 2013, Jed McCaleb separated from active employment with Ripple.
• On 6 October 2015, the company was rebranded from Ripple Labs to Ripple
• Ripple is summary was founded by Chris Larsen and Jed McCaleb
• Who is Chris Larsen? Co-founder and executive chairman of Ripple (has 5.19 billion of the company’s digital coin XRP and a 17% stake in the company)

• Chris is someone that has founded multiple companies, especially in the tech, peer-to-peer lending space. He has founded the following firms: Prosper Marketplace, E-loan, Palo Alto Fund group.

• Prosper was one of the original players to enter the peer-to-peer lending as it was in its early infancy. If you recall other firms that have entered the space (Lending Club, Lending Tree, SoFi etc), I recall reading their pitchbooks at several office meetings when they were soliciting business from various endowments and foundations. What was interesting was the fact that they took out the middle man of banking. None of the banking and custodian fees etc. It was straight person to person and they collected the fees between. It was a great business model.
• Who is Jed McCaleb?

• It is alleged that McCaleb hold 9 billion XRP tokens (as of 2014)
• As part of the exit settlement, McCaleb has sold his equity in Ripple, and has agreed to sale controls on 5.3bn XRP owned by him and his children. An additional 2bn XRP will be donated to an as-yet-undisclosed charitable fund.
• The sale controls are tied to daily volume in XRP markets. For the first year, according to Ripple, McCaleb will be unable to sell more than 0.5% of average daily volume "for each day of the week, including weekends and holidays".
• During the second and third years of the agreement, this amount grows to 0.75%, while it accounts for 1.0% in the fourth year. Beyond the fourth year, the amount is set to 1.5%.
• The remainder of the schedule prevents McCaleb from selling more than (this is as of 2014):
o $20,000 per week during the second, third and fourth years (year 4 is 2017)
o 750m XRP per year for the fifth and sixth years (2018, 2019)
o 1bn XRP per year for the seventh year (2020)
o 2bn XRP per year after the seventh year (2021).
• Jed McCaleb is an American programmer known for creating the peer-to-peer technologies eDonkey and Overnet, as well as the bitcoin exchange Mt. Gox (which was then sold to Mark Karpelès)
• The eDonkey Network (also known as the eDonkey2000 network or eD2k) is a decentralized, mostly server-based, peer-to-peer file sharing network created in 2000 by US developers Jed McCaleb and Sam Yagan that is best suited to share big files among users, and to provide long term availability of files. – think DROPBOX.
• He founded the company Ripple in 2011, which he left in 2013, and went on to develop Stellar in 2014. In January of 2018 McCaleb's Ripple token ownership were worth $20 billion, which would put him at 40th place in Forbes' list of world's richest people. -- which is crazy! Bitcoin doesn't have that same type of ownership, which reflects the decentralized approach vs centralized (mining vs. non-mining).

Key Takeaways:
• Ripple had created 100 billion Ripple coins (XRP) initially and 38 billion of them are in circulation at the moment.
• There are no explicit numbers but the initial founders of Ripple were awarded 20 Billion of XRP. That means 20% of the initial 100 Billion are in the hands of Chris Larsen and Jed McCaleb.
• Chris holds about 2-3 Billion XRP (after donating 7 Billion? To Ripple Foundation)
• Jed is under a mandatory sale of his initial 9 billion XRP (2 billion will be donated, I assume he sold some at some point, but according to the settlement agreement he has 5.3 billion XRP to divest). At year the beginning of year 4, that means he still has 4 billion XRP left.
• His sale of XRP could be quick in year 2018 and 2019 where he can sell 750 million XRP each year, if the price holds.
• Regardless you have two of the largest holders at a estimated combined 6-8 Billion XRP of a available public float of 38 billion (~ 7 divide by 38) = 18%. --- KEY POINT --- these two have influence over 18% of XRP’s price action. IF they come to the market and just sell, they will create a title wave of selling on XRP. So becareful!!
• I don’t mean go out and sell your XRP….but size your position and monitor it.

Follow Me @epan35

Reply (with a good comment) and Upvote and I'll return the favor! I need Feedback!