Oct 7, 2022
Alot of noobs in the crypto space as well as youtube shills including some of the largest influencers will tell you how great these scam coins are and how much money you can make. These guys are liars and have never done any research into the project. Well what makes these coins a scam you might ask? Let's dive into it...
First I would like to share 2 links from Messari which is a crpyto
research company. I will add images for both as well if links aren't
XRP (Ripple) - https://messari.io/asset/xrp/profile/launch-and-initial-token-distribution
XLM (Stellar) - https://messari.io/asset/stellar/profile/launch-and-initial-token-distribution
Let's start with Ripple 20% given to the founders which many in the crypto space today will tell you is a reasonable amount diluted by the idea developers need tokens to promote the network going forward. Real open source projects that many people have never seen before clearly are not funded by keep tokens for themselves collecting instant profits when people "invest" in them examples of this can be found from major projects like Linux, or smaller open source projects like OBS Studio and can even be found in the crypto space in coins like Bitcoin, Litecoin and Monero. Altcoin fanboys who buy these scam coins will however fight to the end that developers do need these tokens to get partnerships, even though projects like Bitcoin and Linux will have companies come to work with them because the product is good not needing to be paid to do so.
Even ignoring this fact we can see another 77.8% was given to Ripple the company as well for a total of 99.8% Tokens handed to Ripple in one form or another, that's just insane! So then how do people by this token you may be asking if Ripple controls pretty much all of it. For those not interested in understand the backend of how it works I will make it simple here they are selling the coins from their wallets making pure profit off all coins going into circulation. This should be obvious considering a company owns the network that's the first major red flag they are basically selling a product.
For those interested in how this works we first need to understand what "Escrows" are in Ripple. An escrow basically allows ripple to lock the tokens for now and have them unlock at certain periods of time, these tokens will remain untouchable by Ripple until the timer is reached then pushed onto the market for sale making a pure profit for Ripple. The bad news of this is people "investing" in this are being scammed out of money by basically buying a product which is why they are in a lawsuit from the SEC. People however will still defend XRP to the death showing partnerships happening or upcoming on the network that make it "valuable" even though as mentioned before these tokens are kept by the project mainly to buy partnerships. Assuming this is the case Ripple doesn't need to develop anything and can keep buying partnerships to keep their delusional #XRPARMY hyped while making pure profit on the coins they dump onto the market.
Most of the people investing in altcoins are here to make more fiat currency and don't see the flaws with fiat. You even have people in the #XRPARMY making petitions to Ripple to stop dumping tokens on them so the price can go. It's like one big ponzi scheme for people who lack an understanding of how markets function, eventually people will sell leaving new people you brainwashed into buying at higher prices left hold the bag going broke. Many people fall into the trap of constantly going up and up because that's how the current system works the debt keeps rising as we print more and more fake money however this is another discussion entirely I may do at some point.
Ripple Petition - https://www.change.org/p/ripple-stop-ripple-dumping
A few last things I would like to mention before moving to Stellar (XLM) is that Ripple launched while controlling 100% of the nodes on the network you know those things that verify what transactions are allowed to go through? They have since allowed non Ripple nodes to run the network as well to verify nodes. What do I mean by allowed you ask? You can now run a validator buying the hardware and what not however the current validators have to approve you to be allowed to actually have any say in the consensus which is usually earned by validating yourself through a domain name that you own. The nodes are also not P2P (Peer to Peer) they connect to 1 or 3 central hubs (at the time of writing) instead of directly to each other. Lastly I would like to share a bunch of wallets that Ripple has used to dump XRP on the market from escrows, to keep this post short I have added a link to a Pro-XRP Site that covers the escrows XRP has dumped and the profits they have made very well their opinion is irrelevant as what's important is the data they are sharing.
Stellar (XLM) has a similar goal to Ripple (XRP) which is to bring governments and other central banks on board and use their CBDCs (Central Bank Digital Currencies) natively with easy conversion on the fly between them. This is no moat and doesn't fix the problem with the central bank at all and just moves us from our current broken system to a digital more censored version of it. I may also do writeup on the problems with CBDCs in the future.
Let's start with the token distribution this is where we start getting into the "Foundation" scams, and what I mean by that is that it's basically the same as a company who has a large say over what happens to the product A similar example to this would be the old PowerPC CPU's created by the AIM Alliance where in which one company or in this case foundation would have a majority say over what happens as they created the product. This is how a majority of alt coins function including Ethereum. I am not saying AIM worked this way I am just saying it's a similar example of companies working together on something in which you could imagine a company who say created the original product would want to hold a majority of say in it moving forward.
I personally disagree with the way Messari has shown the graph if you read the actual distribution percentages you can see the foundation actually controls much much more than 48% at launch even if they gave some of it away. 50% is to be distributed over time as part of the "Direct Sign-up Program" sadly I can't find anything about this I do have stellar's official linked below though stating it would be given to people for free over a period of time and reddit I could only find mentions of people asking if it was over already and another guy saying it was for in person meet ups. So I have no idea if this was just a scam or what either way we can add the 50% to stellars total token count upon launch.
Next we have the Bitcoin Program which was meant to give bitcoiners a chance at getting free XLM to incentivize them to use the network. I assume this was a failure as most bitcoiners aren't interested in shitcoins (altcoins) this can't be proven however in the second airdrop which I have also linked below we can see they also offered 1B to current XRP holders which we can assume shows they weren't able to get rid of the XLM. THis actually works in Stellar's favor as if you also read in the second airdrop post it says any unclaimed XLM will be given to the foundation (even though they already controlled it) to the operational fund. Seems stupid to me if they are dedicated to going to Bitcoiners it should remain locked in a wallet and even today if some bitcoiners of from those old wallets want the XLM can claim it even years after the airdrop, in this case any tokens unclaimed are effectively burned which is better than the foundation having control of the network in my opinion. Another thing I wanted to mention about this airdrop is that the first round was 2 years after launch in 2016 when the coin launched in 2014, the second airdrop was 3 years after launch in 2017. Isn't this something that should have be done all at once on launch? Seems to me like Stellar had control of the network for years to shape it how it wanted like a centralized product.
First Airdrop -
Second Airdrop - https://www.stellar.org/blog/bitcoin-claim-lumens-2
The rest is pretty straight forward, what Messari has done here is given XLM some credit it doesn't deserve however by saying the 50% allocated to the "Direct Sign-up Program" is pre-mined and given to the public which is true but not the full story as far as I can tell as I can't find the exact airdrops it was handed out which would imply Stellar had custody of the funds upon launch. Premine's are not a good thing anyways in my opinion. But what really makes XLM a scam besides token distribution is again the node system (consensus). I have attached an image below to give a better idea of how it works.
So this may look confusing it may not I will explaining through it anyways. The way Stellar's consensus works is by having the nodes "trust" each other to verify transactions similar to how Ripple the nodes can not trust you and thus giving you no say in the consensus. To my basic understanding in this image N trust all the other letters but the other letters don't trust N as they don't have an arrow back to N, basically each node can choose what other nodes they trust and don't trust and 51% of nodes should eventually agree on the consensus to form a block as eventually they will be connected to each other. This is better than Ripple's solution however is still flawed in the fact that if the other nodes didn't like someone and wanted to block their transactions and you didn't agree you would be out casted from the quorum. This makes it less of a scam consensus wise than Ripple however based on the initial distribution and the current dumping of coins yearly on the market I would advise staying away from both of these projects. This does not mean the price can't go up both XLM and XRP have partnerships for things like CBDC's however the end goal of these projects doesn't fix our current problem and it has hugely benefited the companies/foundations that have created them by allowing them full control of the coins upon launch. I would assume these projects will fail once they run out of tokens to give companies to use their network then it would rely solely on the community in which case it can go either way. If you don't understand the original goal of cryptocurrencies and see them as an easy way to make more fiat (dollars, euros, whatever) then I would recommend you read the book The Bitcoin Standard by Saifedean Ammous which explains the history of money and the flaws in the current system. I have provided 2 more links below to help better explain Stellar's consensus if you are interested in learning more about it and I have also provided a link to the amount of XLM Stellar foundation still has control over as of 2019.
Simply Explained: Stellar Consensus -
Understanding Stellar Consensus - https://medium.com/interstellar/understanding-the-stellar-consensus-protocol-423409aad32e
Stellar Funds as of 2019 - https://stellar.org/foundation/mandate