Eric Yakes’ Critical Review of Ripple and XRP: An In-Depth Analysis
Eric Yakes, a Chartered Financial Analyst (CFA) and the author of “The 7th Property: Bitcoin and the Monetary Revolution,” has voiced a strong critique on February 10 against Ripple and its associated XRP token. A notable figure in the Bitcoin venture capital space as Co-Founder and Managing Partner at Epoch, Yakes took to X to express his concerns, pointing out what he views as critical flaws in Ripple’s business model and governance structure.
Eric Yakes Challenges Ripple and XRP’s Credibility
Yakes initiated his critique with a sweeping condemnation of Ripple, remarking that “Ripple represents the exact issue Bitcoin was created to solve: the fabrication of artificial currency for political leverage.” He argued that Ripple lacks a valid use case, labeling it as “wholly misguided” and admitting he spent “an hour researching Ripple” prior to a speaking engagement at a traditional finance conference (TradFi). This research, he claims, solidified his belief that Ripple’s technologies and token economics mirror the centralized monetary system Bitcoin was designed to dismantle.
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Concerns About Ripple’s Objectives and Token Economics
Yakes meticulously outlined his criticisms, particularly targeting Ripple’s ambitions in remittance and central bank digital currency (CBDC) domains. He stated, “No one favors a volatile, centralized, and illiquid bridge currency (XRP)” when more stable alternatives like Bitcoin or stablecoins are available. He further argued, “The sole purpose is to deceive retail investors into inflating the token’s price,” suggesting this is facilitated through strategic marketing alliances with banks and political lobbying. Yakes contended that the XRP token’s supply lacks genuine scarcity, alleging that the ledger can be forked as desired and that the foundation sells XRP to fund political endeavors. He stated, “These are precisely the issues Bitcoin’s decentralized framework aims to confront.”
Analysis of RippleNet’s Adoption and Network Centralization
Yakes also critiqued RippleNet’s purported transaction volume, which he deemed insignificant compared to other digital currencies. He cited RippleNet’s self-reported total settlement volume of $30 billion since its inception and juxtaposed it with Tether’s $50 billion and Bitcoin’s $40 billion daily turnovers, dismissing Ripple’s claims of widespread adoption as “a misleading spectacle.” He posited that banks are more interested in the attention from a “press release” than in utilizing XRP, arguing that XRP does not fulfill a real need in global remittances. Yakes further criticized Ripple’s network as centralized, indicating a recent unilateral shutdown as evidence of inadequate decentralized consensus.
Political Implications and Concluding Remarks
Yakes emphasized his political stance by highlighting Ripple’s discordance with certain US government directives, noting, “Its primary ambition is to serve as a CBDC platform, fundamentally opposed to the Trump administration’s executive order banning CBDCs.” He concluded his critique by stating, “If you wish for this corrupt organization to gain political favor to elevate their token’s value, you might want to seek a higher purpose in life,” making his position on Ripple and XRP unmistakably clear. Ripple executives have yet to formally respond.
The XRP Community’s Reaction
The XRP community quickly responded, with some members accusing Yakes of spreading misinformation. Among the notable responses was from Matt Hamilton, a former Ripple developer now associated with Protocol Labs and Bittensor. Hamilton argued against Yakes’s conflation of Ripple the company and XRP the cryptocurrency, explaining, “Ripple and XRP are distinct entities. Ripple is a company, while XRP is a cryptocurrency. The goals of remittances and CBDCs are specific to Ripple, not XRP.”
Hamilton also addressed Yakes’s criticism of XRP’s volatility, noting that due to the rapid settlement of transactions on the XRP Ledger, the impact of volatility is less significant than suggested. He highlighted the broader ecosystem on the XRP Ledger, mentioning, “Stablecoins can also be utilized on the XRP Ledger if desired.” Hamilton clarified public perceptions regarding Ripple’s partnerships, arguing that incentivizing early adoption is standard practice for emerging companies seeking liquidity and does not negate the protocol’s fundamental utility.
On the technical front, Hamilton refuted claims of a unilateral shutdown of the XRP Ledger, explaining that a recent network halt occurred due to a temporary lack of consensus, a designed response rather than proof of centralized control. He noted, “The network paused as intended due to an inability to reach consensus temporarily. It was not an instance of someone ‘unilaterally stopping it.’ The network resumed once able to.” Hamilton also pointed out that thousands of Bitcoin nodes operate without direct financial incentives, indicating that similar principles apply to validators in other open blockchain networks, including the XRP Ledger.
Hamilton further challenged Yakes’s assertions regarding Ripple’s origins and political activities, clarifying that Ripple is a US-based company, while the XRP Ledger Foundation, a separate entity, is registered in Estonia and is relocating to France.
At the time of writing, XRP is trading at $2.48.
