The “war” between Ripple supporters and their opponents took a personal turn this week after a new report from crypto research firm Messari suggested the market capitalization of Ripple’s XRP cryptocurrency may be overstated by as much as USD 6.1 billion, based on “inflated circulating supply numbers.”
In the report, Messari said XRP’s circulating supply and market capitalization could be overstated by as much as 48%. If that’s true, it would put XRP’s current market cap at USD 6.9 billion, instead of the official USD 13 billion that it is listed with today.
The company arrived at these numbers by analyzing how much of the officially circulating supply it deemed to be “illiquid or subject to significant selling restrictions” by Ripple. When accounting for this, Messari believes that 19.2 billion XRP out of the 41 billion XRP in the official circulating supply, fits the definition of “illiquid.”
It followed up by recommending major crypto indices such as Bloomberg-Galaxy, Bitwise, and CryptoCompare to immediately adjust XRP’s market capitalization down “to more appropriately reflect its true network liquidity.”
Still, Messari also admitted that Ripple had not given access to some of the data needed to conduct a thorough analysis of the real market capitalization, and that some of the estimates therefore “lack precision.” However, the researchers also added that they believe the estimates to be “directionally correct.”
Ryan Selkis, founder of Messari, also insisted on Twitter that his team gave Ripple plenty of time to respond to the report before it was published:
We emailed @ripple 4 times in 48 hours preceding publication of our research report, asking @MonicaLongSF and @CoryTV for comment and their help reviewing assumptions. We sent the entire report in advance, highlighting assumptions we needed clarity on.
They refused to respond.
— Ryan Selkis (@twobitidiot) January 24, 2019
Meanwhile, a spokesperson for Ripple told Coindesk that the report contains “several inaccurate assumptions around lockups and selling restrictions,” and is based on an “incorrect calculation of market capitalization.” According to the spokesperson, “the term ‘market cap’ is always a very simple calculation: current price X total number of the asset = market capitalization. That puts XRP’s current market cap at approximately USD 31 billion.” Ripple’s calculations are based on the fact that there are almost 100bn XRPs in total, while websites such as Coinmarketcap are using the number of circulating supply, which stands at more than 41bn.
In either case, despite being widely used, market capitalization as a method of looking at digital assets is often criticized for being misleading. It can be easily be manipulated and it is important to look at a wide range of different metrics.
the the future of market cap is a tangled morass where no one knows anything. I can make a case against 'market cap' for any "cryptoasset", ripple, bitcoin, or other.
— nic carter (@nic__carter) January 24, 2019
Despite the news, XRP is up by 0.75% in the past 24 hours (UTC 07:22 AM.)
Police might be needed
After the research was published, Messari’s founder said publicly that he has received what he considers to be threats against his family from the XRP community. He went on to ask Ripple and its CEO Brad Garlinghouse to officially denounce the threats members of the community had made to him, while adding that he will bring the case to the police.
I want @Ripple @bgarlinghouse @MonicaLongSF @CoryTV @JoelKatz @warpaul to denounce any $xrp community threats against my family. I’m going to the fbi and local police after THREE calls. Ensuring our family doesn’t get swatted.
I’m not going home until it’s publicly stated.
— Ryan Selkis (@twobitidiot) January 25, 2019
Reactions from the community were mixed to Selkis’ claim that his family had received threats.
This is what happened to me & family during #SegWit2x brouhaha. Local police & FBI were called then, too. There are some sick parts of this community. https://t.co/OMTCmXhKAk
— Jeff Garzik (@jgarzik) January 25, 2019
Others called out XRP supporters, calling them losers for getting so upset about their “magic internet money”:
If you’re threatening someone’s family because a research piece affects your moon bag, you’re undeniably a loser.
It’s magic internet money, I don’t care if it’s XRP, BTC, TRX or DentaCoin, get your heads on straight, holy hell. https://t.co/fY4SITu0MU
— Crypto Bobby (@crypto_bobby) January 25, 2019
Ryan Selkis also shared some more details, saying someone called him up and recited his wife’s birthday before hanging up:
Someone just called me from a Nashville number and recited my wife’s birthday to me. Then hung [email protected] these are the type of animals you and your fucking company enable.
— Ryan Selkis (@twobitidiot) January 24, 2019