Rise of Bitcoin Competitor Ripple Creates Wealth to Rival Zuckerberg

Chris Larsen, a co-founder of the Ripple virtual currency, at Ripple’s headquarters in San Francisco. He briefly became the world’s fifth richest person on Thursday as the value of Ripple has soared. Peter DaSilva for The New York Times

SAN FRANCISCO — The virtual currency boom has gotten so heated that it is throwing the list of the world’s richest people into disarray.

Consider what has happened to the founders of an upstart virtual currency known as Ripple, which has seen its value skyrocket in recent weeks.

At one point on Thursday, Chris Larsen, a Ripple co-founder who is also the largest holder of Ripple tokens, was worth more than $59 billion, according to figures from Forbes. That would have briefly vaulted Mr. Larsen ahead of Facebook chief executive Mark Zuckerberg into fifth place on the Forbes list of the world’s richest people.

Other top Ripple holders would have also zoomed up that list as the value of their tokens soared more than 100 percent during the last week — and more than 30,000 percent in the last year. The boom has turned Ripple into the second largest virtual currency, within striking distance of the original behemoth, Bitcoin.

The explosion in Ripple’s value over the past month is the starkest illustration yet of how the mania around Bitcoin has spilled over into a broader universe of virtual currencies. These coins — with names like Cardano, Stellar, and Iota — are generally new twists on the Bitcoin technology, which uses a decentralized network of volunteer computers to keep a record, known as a blockchain, of all transactions.

While most of these currencies were worth nearly nothing a year ago, many are now responsible for creating billionaires — albeit with rapidly fluctuating fortunes. If this is a tulip fever, the fever has spread to chrysanthemums and poppies.

Mr. Larsen’s soaring wealth sparked a few congratulatory messages on Twitter on Thursday, even if the value of Ripple — and his Forbes ranking — dropped later in the day. But his net worth, and the ballooning value of Ripple tokens, mostly drew comments about the irrationality of the virtual currency markets, which appear to be largely driven these days by the fear of missing out, or FOMO.

“This is beyond insane,” said Jeremy Gardner, an investor who previously worked at the virtual currency hedge fund Blockchain Capital, which invested in Ripple. “There’s absolutely nothing driving this rally except rampant FOMO, misinformation, and speculation.”

Ripple, whose tokens are known as XRP, is far from the only virtual currency being fueled by the hysteria. In 2017, there were 29 tokens — including Einsteinium and Byteball — that rose more than Bitcoin’s remarkable 1,600 percent jump, according to OnChainFx, a data provider.

Nearly 40 virtual currencies are worth more than $1 billion — when all the outstanding tokens are counted at their current value — despite many of them not having been used in any sort of transaction other than speculative trading.

Bitcash, a Blockchain exchange office in Seoul, South Korea. Much of the frenzy around virtual currencies, including Ripple, has been driven by South Korean investors. Woohae Cho for The New York Times

Against this backdrop, Ripple could be considered a staid institution, though one with a colorful history.

Ripple was invented in 2012 by Jed McCaleb, a programmer who had created Mt. Gox, a Bitcoin exchange that later dissolved in disgrace. Mr. McCaleb designed Ripple as a faster and more efficient version of Bitcoin, without the mining process that Bitcoin uses to distribute new coins and secure the network.

Mr. Larsen joined Mr. McCaleb early on to create a company, also known as Ripple. The company helped develop an open source Ripple software that makes it possible to move money between digital wallets. The Ripple token is one of the currencies that can be transferred with the software…

Read Full: Rise of Bitcoin Competitor Ripple Creates Wealth to Rival Zuckerberg