Why do people say XRP makes them 'short-circuit'?
In the cryptocurrency space, the emergence of XRP has disrupted many traditional concepts, especially those 'common sense' ideas regarding venture capital (VC) and protocol value.
The earliest perspective was that VCs always prefer to sell off, so if one wants to counter VCs, they should choose those meme coins. However, more and more people are beginning to question this perspective. It turns out that the protocols that can truly counter VCs are those with stable cash flows, especially some long-term stable U.S.-based protocols, with coins like XRP sometimes referred to as 'dinosaur coins' or Dino coins.
First of all, Hyperliquid demonstrates an important case: some startups have succeeded through community-driven distribution methods. Jeff initially supported the project with his own funds, and it proved that even without VC support, community-oriented distribution can be achieved.
Looking at XRP, it proves that cryptocurrency 'whales' value the reliability of the protocol more, and this reliability is closely related to the duration of the protocol's existence. XRP challenges the core assumptions of venture capital, with several points particularly hard for VCs to accept:
1. No venture capital exposure: XRP has received almost no venture capital investment, and VCs cannot benefit from it.
2. Lack of smart contracts: XRP does not rely on smart contracts, which is the technical foundation for most VC projects; clearly, XRP is taking a different path.
3. Mismatch between user numbers and value: XRP only has about 20,000 active wallets, yet its market cap is as high as $180 billion, which completely breaks the traditional view that 'protocol value relies on a large number of users.'
4. Focus on transaction sending: The core function of XRP is to efficiently send transactions, and this efficiency of a single function makes those multifunctional protocols seem somewhat inferior.
The 'God Candle' event of XRP/SOL and regulatory warnings
The 'God Candle' event of XRP/SOL (i.e., a sudden price surge) coincidentally occurred at the same time as the exposure of human exploitation, human trafficking, and attempted suicides during a live broadcast on Pump.fun. This series of events sparked widespread reflection: when a protocol has a large number of users but lacks a review mechanism, it is likely to lead to extremely negative consequences, including the breeding of illegal activities and the exacerbation of social issues. Such situations will ultimately draw the attention of regulatory bodies or law enforcement.
This also raises a controversial feature of XRP - Trust Lines. Trust Lines require users to actively establish trust relationships before accepting a certain token, meaning users cannot arbitrarily send 'racist tokens' or other unpopular tokens to any address.
Although this design has been criticized as a 'high-friction' user experience (UX), it effectively prevents low-quality usage while meeting the needs of high-quality users (such as banks). As the market becomes increasingly aware of the risks that the lack of these safeguards may bring, this mechanism has gradually gained more recognition.
In contrast, Bitcoin (BTC) has almost no similar mechanisms, yet it still outperforms Ethereum (ETH), even though Ethereum claims it can 'drive Web3.' This indicates that the market changes are just beginning, but the SOL live event has allowed everyone to truly understand what 'mass adoption beyond buying' looks like and has made them realize the importance of compliance.
Another noteworthy change is the radical shift in the U.S. law enforcement system since Trump's election, which has effectively ended the survival dilemma of many crypto protocols. U.S.-based protocols like XRP no longer face a survival crisis but rather enjoy 'navy' protection. If anyone attempts to scrutinize Ripple Labs' operations, they may face strong resistance from the U.S. government.
The biggest risk XRP faced was that the U.S. government might accuse its unique node list (UNL) of being involved in money transmission issues and impose OFAC sanctions while having the SEC sue every validator to force compliance. However, with changes in the regulatory environment, these former risks have now transformed into a significant advantage for XRP.
Protocols like Cardano and XLM, which have similar risks, have also taken more proactive actions. Currently, the U.S. regulatory environment has regarded them as one of the tools to counter censorship.
Moreover, the unique position of the U.S. in the global financial system also influences this trend. The U.S. is the center of global anonymous cash, and other countries find it difficult to enforce their reporting requirements on U.S. financial institutions. Tether can be seen as an on-chain extension of this logic - a semi-compliant cash reserve pool with a scale of up to $135 billion. As long as these assets are denominated in dollars, the U.S. government does not care about the reporting requirements of other countries, which is also the reason why Tether closed its business in Europe.
The United States hopes to further consolidate the global dominance of the dollar through innovation in the cryptocurrency space. Consequently, the development activities of XRP have gradually shifted from 'marginalization' to becoming part of U.S. government policy.
Although the recent price fluctuations of XRP can partly be attributed to retail-driven actions, in reality, especially for established coins like XRP, the holdings are highly concentrated. Most whales in the network have not sold off at the current price, even though market liquidity fully allows them to do so. This indicates that they still maintain confidence in XRP's future, and this confidence stems from the multiple factors mentioned above.
The logic of the market never goes wrong; our task is to try to understand it and learn from it.