Ripple CTO David Schwartz has spoken out in a recent tweet about the XRP buyback proposal that first surfaced in 2021 and is now resurfacing with a second iteration. The controversial proposal is currently being heatedly discussed again on Twitter after Valhil Capital CEO Jimmy Vallee brought up the idea again.
The theory is based on the belief that XRP will become the world’s reserve currency when government debt skyrockets worldwide and all banks switch to ISO 20022 and use XRP to conduct cross-border monetary transactions. This would mean that governments around the world would have to buy large amounts of XRP.
According to Vallee, this would create the need for a buyback, as XRP purchases by governments could not take place in secondary markets. In addition, the Valhil Capital executive also points to the need for a Bretton Woods-like case in this context, in which XRP the IMF deems the token an eSDR (Special Drawing Right) and XRP holders must sell their tokens to the government at a fixed price, just like gold.
Vallee, Valhil Capital and a confidential committee would be basically in charge of informing the best possible outcome in that situation. Remarkably, Vallee estimates the price at $50,000 per XRP. This price and theory inherently makes for heated discussion. And Ripple CTO David Schwartz has also taken notice.
What people don’t understand about the #XRP buyback proposal pic.twitter.com/HpN3gphth9
— CryptoLewLew (@cryptolewlew) December 15, 2022
Ripple Execs Slam The XRP Buyback Theory
However, Schwartz doesn’t leave any good marks on the XRP buyback proposal. According to Schwartz, it looks like fraud on the surface. The Ripple CTO revealed that he hasn’t looked very closely at the theory, but drew a comparison to the frauds in 2012 and 2022.
“I haven’t looked at it very closely. But what I have seen looks an awful lot like a scam to me. If we’ve learned anything from 2012 and 2022 it’s that anyone promising high returns with low risk is almost certainly going to rob you,” Schwartz said.
By his comparison to 2022, Schwartz is apparently referring to the collapses of Celsius, 3AC, BlockFi and also FTX. The comparison to 2012 is rather unclear, though he is likely referring to Trendon Shavers’ Bitcoin Savings & Trust (BST).
The BST was a pyramid scheme set up by Shavers in November 2011, offering a very high interest rate of 7% per week. At the time, the so-called investment platform attracted 500,000 Bitcoins, and collapsed within a year after Shavers misappropriated the money for personal expenses.
Matt Hamilton, former director of developer relations at Ripple, also thinks Vallee’s claims are illogical. In a series of tweets, he doubted the calculations, writing:
OK, so yet again you are assuming that 100% of global GDP will translate into XRP value? Why? All the goods exported, the oil, the food, the financial services. You think 100% of that magically becomes XRP value in the next decade? How?
Another question that remains unanswered, according to Hamilton, is why the U.S. government wants to buy back XRP from holders at a “stupidly high multiple of the market price.”
At press time, the XPR price followed the broader crypto market sentiment and was down 3% within the last 24 hours, trading at $0.3979.
Featured image from iStock, Chart from TradingView.com