Ripple works with the help of “gateways” - these are companies like Bitstamp, Gatehub, Tokyo JPY, Mr. Ripple. Gateways accept currency deposits from users and issue balances to the Ripple distributed ledger. Gateways are something like banks in this system, but they are united by one global register - the Ripple protocol. The Ripple protocol is based on a ledger that uses a consensus process, and this allows users to transact and exchange money in a distributed process.
In 2017, a lot of people learned about Ripple. This happened due to the rapidly growing exchange rate for the cryptocurrency and the growth of its market capitalization. The transformation of Ripple from a second-rate cryptocurrency to one of the most popular happened very quickly - three months ago few people were interested in it. However, despite the rise in the price of cryptocurrency, the Ripple system has one huge drawback that cannot be eliminated.
In a document from the company RippleLab, released in 2014, it is written: “Gateways have the power to freeze funds in the account of any user. Frozen funds can only be sent to the gateway that issued this money. The global freezing function allows gateways to freeze all accounts of their users at once.”
As the company explains, The funds freeze feature allows you to “freeze personal funds in an account to investigate suspicious activities.” Owning XRP or logging into a gateway system in a country where cryptocurrencies are illegal, holding an unusually large amount of XRP in your account are all considered suspicious activity. In the case of other cryptocurrencies, if a user is suspected of breaking the law, law enforcement agencies have to collect a whole package of documents to gain access to the user's account, and after that they would have to provide strong evidence that would convince the company to restrict the owner's access to his funds.
In the case of Ripple, they can simply call the gateway company and ask them to press the Big Red Button. This is the difference between Ripple and other cryptocurrencies.
The author of the article does not believe that RippleLabs has a desire to freeze the accounts of its clients. This could be bad for their business. However, a company that allows gateways to freeze accounts with a simple click of a button goes against the very idea of cryptocurrencies. And as soon as the first account is frozen, this may lead to a sharp decrease in the customer base.
According to https://news.bitcoin.com
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