XRP v SEC Court Case, what does it mean for Crypto?

Rumours on the Ripple (XRP) court case finalising December however legal battles often drag on longer than anticipated. Commencing in December 2020, the SEC are looking to rule the coin Ripple as a security and charging executives with Offering Unregistered Securities.

The announcement took a heavy toll on Ripple, considering the SEC have won all Section 5 court cases for the last several decades. The ruling of ripple, a cryptocurrency, being determined legally as a security could have dire consequences for cryptocurrencies globally and lead to further change down the road. On the flip side, a ruling of any nature may help to develop the cryptocurrency space and open new doors that have not been considered previously.

Given the space is currently considered the wild west of investment, filled with spammers, hackers, crypto millionaires and on the basis of what was originally used for criminal activity due to the decentralised and private nature of crypto, a tidy up of affairs in the industry could have a highly positive effect long term.

In the event Ripple becomes classed as a security (along with many other cryptocurrencies following the ruling), the landscape may see a diversion away from an investment concept and lean further into the technology and its applications. Effectively, we would later see cryptocurrency be coined the term blockchain to align with its use case.

What are the use cases of blockchain?

Blockchain is a decentralised database or ledger stored on a series of nodes, reducing the requirement of trust in third parties due to the way the security and storage of the data is made and held. There are many uses for blockchain already, however blockchain is in its infancy when it comes to an industry and many of the use cases for the future are yet to be discovered.  

Blockchain’s applications include database and ledge storage that is unable to be changed once performed, smart contracts and decentralised currency use. This outlines that currency on a blockchain is transparent, decentralised and secure as a system on its own. Banking systems in some countries are difficult to trust and carrying cash in some locations is difficult. The application of banking using decentralised blockchain allows users to place more trust (since they do not need to ‘trust’ a particular party or group) in their currency of choice. It reduces the chance of theft and there is no bank to put holds on funds.

Smart contracts are a form of contract that create a promissory remuneration or condition, provided a condition is filled. Upon the smart contract being fulfilled for one party, the contract then applies the condition for the secondary party, meaning less trust is required for each party in each other. Like coding, the smart contract will determine conditions and statements and if an amount is to be paid, the contract may require that amount to sit with the contract so the fulfillment can be made automatically.

Industry disruption is something that blockchain is likely to have a big impact on, by introducing applications that greatly improve industry transactions and workflows.

Blockchain Technology Is Here To Stay

Whether or not Ripple are ruled as a security, currency or otherwise, blockchain as a technology is here to stay. With so many applications yet to be considered and a market that is so focused on investment use rather than the technology itself, blockchain is set to disrupt and become a staple in the lives of billions of people worldwide in due course.

Effect of Stricter Guidelines in Cryptocurrency

The fall of FTX, Cryptopia and many other exchanges along with the fall of many altcoins hasn’t give the cryptocurrency industry a good name. With ways of losing your coins, not just in value but also by way of hacks, incorrect transfer to the wrong address and exchanges going under, crypto may become stronger with the backing of global regulation and deeper understanding of the classifications used.

Regulation may help to reduce issues such as hacking, exchanges going under and perhaps more effort may be made to create a deeper layer of security, trust and education in using crypto.

What To Watch

As the lawsuit unravels, watching the updates for the XRP v SEC case in the US is going to be interesting and it may set precedents across the entire industry. When something is legalised for broader use, it opens the door to legitimate operators and legitimises the use cases that underly the concept of cryptocurrency.

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