Ripple Labs Finalizing $30 Million In Funding

Ripple Labs, the company behind the cryptocurrency Ripple (and the Ripple protocol) which allows the transfer of value on its network through a series of trusted nodes, is close to finalizing a $30 million funding round, according to a report by the Wall Street Journal. Once this Series A funding round is completed, Ripple Labs will be valued at close to $100 million. This will be the second major funding round for Ripple Labs. The company had previously raised $3.5 million in its Angel round from many of the top venture capital firms in the Bitcoin space, including some top names such as Bitcoin Opportunity Fund (run by Barry Silbert) and Lightspeed Venture Partners.

Once the deal is completed, Ripple Labs would become one of the best funded startups in the emerging cryptocurrency space, especially considering that their product isn’t based on Bitcoin but on the Ripple protocol. Ripple Labs remains the most valued ‘altcoin’ company today.

The current Series A round also has some of the top venture capital firms, including Andreessen Horowitz, Google Ventures and IDG Capital Partners.

The Appeal of Ripple

Ripple is a decentralized protocol that works as a payment network, with nodes in the network that can choose to trust each other. This trust is represented in the Ripple network but is usually an existing relationship between the two companies. Ripple is targeted more towards banks and financial institutions than every day consumers. Once two banks have established a trust network, they can trade IOUs back and forth, and settle their debts through the Ripple protocol. These entities can also issue their own tokens.

For example, one entity on the Ripple network can issue a gold token, which is backed by physical gold reserves. This token can then be traded across the decentralized network, and can help speculate or hedge against the price of gold, as long as the traders trust the initial issuer. This is especially useful for cross-border transactions.

Ripple has already signed up a few banks, the first one being the Fidor Bank in Germany and more recently Cross River Bank and CBW Bank in the United States. These banks can issue IOUs on the Ripple network and reach their overseas customers directly, without having to pay intermediate banks any fees, which is required in the existing financial system.

Ripple Labs Assets

Unlike Bitcoin’s distribution through proof-of-work mining, Ripple was created by Ripple Labs and then distributed to stakeholders. This has resulted in the distribution of the Ripple token, XRP, to be skewed. Ripple Labs currently holds almost 70% of all the XRPs in the system, capped at 100 billion. In fact, at the current market rate of about 1.6 cents per XRP, the total market capitalization of all the XRP held by Ripple Labs exceeds $1 billion, although it would be impossible to liquidate the assets at this valuation.

Ripples were trading at 5920 Satoshi ($0.015 USD) at time of writing.