Ripple's rise would have briefly vaulted Larsen ahead of Facebook chief executive Mark Zuckerberg into fifth place on the Forbes list of the world's richest people on Thursday. 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 decentralised 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. 'Rampant FOMO' 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. ripple cryptocurrency Credit:Ripple.com "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 fuelled by the hysteria. In 2017, there were 29 tokens - including Einsteinium and Byteball - that rose more than bitcoin's remarkable 1600 percent jump, according to OnChainFx, a data provider. Chris Larsen Credit:LinkedIn

Nearly 40 virtual currencies are worth more than $US1 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. Against this backdrop, Ripple could be considered a staid institution, though one with a colourful history. This is beyond insane. There's absolutely nothing driving this rally except rampant FOMO, misinformation and speculation. Investor Jeremy Gardner Ripple was invented in 2012 by Jed McCaleb, a programmer who had created Mt Gox, a bitcoin exchange that later dissolved in disgrace. 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. Larsen joined 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.

Acrimonious split McCaleb later left Ripple in an acrimonious divorce, though he retained a sizeable number of Ripple tokens. His holdings were worth around $US20 billion at Thursday's prices, putting him close to 40th on the Forbes list. (The actual list is only published once a year, and no big virtual currency holders have been officially added.) McCaleb has since created a competitor to Ripple, known as Stellar. Stellar has risen even faster than Ripple in recent weeks, with all outstanding Stellar tokens - known as Lumens - worth around $US14 billion on Thursday, making it the seventh-largest virtual currency. In contrast, all the outstanding Ripple tokens were worth $US140 billion on Thursday, while all bitcoin were worth $US250 billion. Yet the fortunes of McCaleb and Larsen are not nearly as durable as those of other people on the Forbes list given that the value of virtual currencies fluctuates wildly. If Larsen wanted to access his wealth by selling Ripple tokens for dollars, it would likely drive down the value of Ripple tokens - and his riches.

McCaleb and Larsen did not respond to questions about the recent price increases. Larsen was Ripple's chief executive from 2012 until he stepped down last year to become the company's executive chairman. During his tenure, Ripple focused on helping banks use its software to shift money between different foreign currencies, something that most banks do through a cumbersome process involving separate accounts in every country where they operate. Ripple has said it has signed up more than 100 banks to use the company's technology, including American Express and Banco Santander. Ripple software But banks do not need to use Ripple tokens for Ripple's software to transfer dollars, euros and yen. That point appears to be lost on many small investors who are buying Ripple tokens.

Most of the buying and selling of Ripple tokens is happening in South Korea, according to data providers that track virtual currency exchanges, where ordinary investors have thrown money at a wide array of virtual currencies. Several virtual currency hedge fund investors said that they have talked to banks and heard about interest in Ripple's software, but not its tokens. "I'm not aware of banks using or planning to use the XRP token at the scale of tens of billions of dollars necessary to support XRP's valuation," said Ari Paul, a co-founder of the hedge fund BlockTower Capital. Ripple has so far announced that one company, a Mexican money-transfer business, is planning to use the Ripple token. Brad Garlinghouse, who took over as Ripple's chief executive last year, said in an interview this week that other institutions were also using - or looking at using - XRP, but the company could not name them because of confidentiality agreements.

Garlinghouse said he thought the rising value of Ripple tokens was justified, given the company's growth and the size of the foreign currency markets that Ripple wants to tackle. "It's clear that people increasingly understand that we are solving a very large problem," he said. 'Crack crypto cocaine' Ripple has attracted the ire of bitcoin fans because Ripple has a greater degree of centralised authority in Garlinghouse's company, even though the Ripple software is open source. Bitcoin and other virtual currencies were designed to operate without companies or governments in charge. But the company Ripple, if not the XRP token, has won a following among top figures in government and finance who are interested in bringing the ideas introduced by bitcoin into the traditional financial system. The company's board includes the former top financial regulator in New York state, Benjamin M. Lawsky, and Gene Sperling, who was the director of the National Economic Council under Presidents Barack Obama and Bill Clinton.

Still, even virtual currency analysts who believe in Ripple's software have said there is a big difference between Ripple the company being successful, and Ripple the token gaining enough traction to justify current prices. "An impossibly long list of things already needs to go right for XRP to become a reserve currency for banks," Ryan Selkis, a virtual currency analyst, wrote in a post Thursday. Loading But, Selkis added, that doesn't mean Ripple's price won't keep ascending. Why? "Because this is crypto, and everyone in the industry is now slinging crack crypto cocaine to retail addicts," he wrote. The New York Times