Eugenia graduated from Minsk State Linguistic University with a degree in Intercultural Communication, Translation/Interpretation (Italian, English). Currently she works as a business analyst, freelance interpreter and tutor. She’s fond of numismatics, photos, good books and sports, adores travelling and cooking.
A great fight between two bitcoin 2.0 contenders created by Jed McCaleb “grips the crypto world.” Who’s going to win?
Nowadays, one of the greatest wars is occurring – the fight for the future of money. A few conquering heroes are going to stay alive until the end of this epic war. Or probably, there won’t be any winners at all.
But it’s clear that the battle between two Bitcoin contenders Ripple and Stellar taking place in San Francisco is a vivid example of the fight between those who hope to substitute either Bitcoin or even the omnipotent dollar.
Despite the fact that the latter is almighty, Bitcoin is the most discussed and the best-known cryptocurrency. Moreover, it’s likely to have its ‘Bitcoin 2.0’ version which will grow from dozens of competing cryptocurrencies.
In one of its latest articles, The Observer focuses on the battle between two digital currencies created by one man – Jed McCaleb. The Ripple protocol belongs to Ripple Labs which was originally called OpenCoin (currency units are called XRPs). The Stellar protocol is created by Stellar Development Foundation which initially was Jed McCaleb’s Secret Bitcoin Project (currency units are called STRs).
In 2010, Jed McCaleb, an outstanding programmer, realized the necessity of a platform to trade in order to make cryptocurrency develop and thrive. For this reason he created a Bitcoin exchange called Mt. Gox which made Bitcoin incredibly popular and then…almost killed it. In 2014, Mt. Gox went bankrupt. The New York Observer reports, that it was announced that 850,000 BTCs (worth about $ 450m) “were missing and likely stolen, though about a quarter of those have since been recovered.”
Understanding Bitcoin’s disadvantages very well, Mr. McCaleb created a cryptocurrency immune to those flaws. Having a great team of brilliant technologists and managers, he launched Ripple which “could match and potentially overtake Bitcoin in shaping the future of cryptocurrency,” states Michael Craig in his article.
Jed McCaleb, being Ripple’s co-founder, brought his girlfriend Joyce Kim to the company and made her CEO. That fact changed everything. Wanting to make Ripple go viral, Ms Kim created all kinds of rumours.
According to Ripple’s employees, Jed’s girlfiend’s behaviour was not appropriate, they even thought she had put some kind of spell on McCaleb. In general, the situation was not appreciated by the staff. In 2013, Kim left Ripple Labs. In March 2014, McCaleb exited the board. Their exit was far from being nice. Two months later, he declared he was dumping his XRPs. And a month later he launched Stellar.
A brand-new Stellar was launched having lots of leaders. According to Ms Kim, the team [as of mid-October] was “about 15 people presently, including employees and contractors.”
It’s important to say that Stellar was linked to Stripe. Moreover, Stripe ran the show. Marshall Hayner, Stellar’s former head of community, said: “Everything I did had to go through Stripe and it made it hard to move.”
Still, Stripe didn’t want to be too close to Stellar. The reason was obvious: Stripe depended on Wells Fargo, a merchant bank. The Observer called Stripe’s backing of Mr. McCaleb “a red flag to Wells Fargo.” The bank was “skeptical of his post-scandal story” related to Mt. Gox and Mark “MagicalTux” Karpeles.
In relation to that fact, the divergence of Ripple Labs and Stellar is getting more interesting. ” In its struggle for mainstream acceptance, Ripple Labs has built deep relationships with banks and tried to comply with the myriad Know Your Customer (KYC) regulations,” says The Observer.
Last week, The Wall Street Journal reported that Ripple Labs was nearing completion of a $30 million financing round.
In contrast, Stellar claimed to be non-profit. Actually, it has displayed “little social conscience beyond bragging about its social conscience. Several of its actions are inconsistent with its declarations, and may someday blow up in the face of its creators,” states The New York Observer. In addition to that, the amount of STRs owned by Stellar insiders is a mystery, and the amount of STRs owned by Mr. McCaleb, Ms. Kim or other employees is not disclosed.
Even though Mr. McCaleb has a reputation as a visionary idea guy and brilliant coder, developing reliable, trustworthy, secure technology is not necessarily his strong suit. His two executed ideas, eDonkey2000 and Mt. Gox, earned their success (before shutting down) by being first, not because they were technologically superior. In fact, Mr. McCaleb’s post-scandal alibi for Mt. Gox is that it discarded every bit of his coding years before.
“When Mr. McCaleb left Ripple Labs, the dynamic at play was that he took his ball and started Stellar. Only it really wasn’t his ball and he didn’t really start anything new,” Michael Craig concludes.