Ripple Could Burn Up to Half of Its XRP Tokens

Ripple Could Burn Up to Half of Its XRP Tokens

Source: Shutterstock

Ripple’s CTO admitted that the company could burn nearly half of the issued XRP tokens. How will this affect the price of the asset?

The destruction (burning) of issued tokens is a common operation in the crypto industry. Tokens are burned to reduce their total circulation. In this case, the price of the token rises. A total of 100 billion XRP tokens were issued. Three years ago, it was announced that in order to stabilize the rate of the coin, the company had frozen more than half, 55 billion XRP. From time to time, 1 billion tokens had been unfreezed. This practice has stabilized XRP indeed, and its price has remained low.

The low price of the token has encouraged financial institutions to use XRP for international transfers. In turn, new partnership agreements attracted investors attention to the token, its rate began to rise. But here again another portion of the frozen stock was being sold, and the rate declined. Recently, however, the Ripple cryptocurrency has gone up sharply. Experts explain this by the fact that competition in the cryptocurrency market became very hot in connection with the Ethereum update and the upcoming launch of the Facebook Diem cryptocurrency (formerly it was called Libra). It seems that Ripple is changing tactics and striving to take a higher place among cryptocurrencies and become a more interesting asset for investors. This is also prompted by the US economic recovery program recently announced by the new US administration, which involves the issuance of another 2 trillion fiat dollars. It is obvious that due to the depreciation of fiat money, the demand for cryptocurrencies will grow. Therefore, Ripple is fighting for investors.

The leak in Twitter could have been a sensation if it hadn’t looked clearly rigged. The user allegedly asked if the Ripple network validators could force the company to burn its 50 billion XRP. Ripple CTO David Schwartz stated:

“There would be nothing Ripple could do to stop that from happening. Public blockchains are very democratic. If the majority wants a rules change, there is nothing the minority can do to stop them.”

Most likely, the leak has two goals at once: to support the XRP rally and once again reach out to the US authorities. Ripple has been trying to legalize its activities in the States for several years, but to no avail. The powerful American banking lobby is blocking all of these attempts, as Ripple provides very fast and very cheap international transfers besides the banking system. Desperate, the management of Ripple has already announced a possible transfer of the headquarters to another jurisdiction. However, that didn’t work either. The announcement that half of the tokens can be burned – is the last warning to the authorities. And a signal to the market: Ripple will no longer hold back XRP rising.