A different view to value XRP
& future predictions
In for some controversial
reading? Something that has a different approach on how to value the price of
XRP? Well, here is my vision.
First of all,
As I've explained in previous blog, the usage of XRP for me is already
determined. Ripplenet is getting a great support and I came to an understanding
that with xRapid currently closing up the Alpha stage, the new users are not
able to use xRapid + Ripplenet. As soon as it gets released into beta (or
possibly skip beta) we will see a significant increase of XRP adoption by
banks.
Anyway, we are not to talk about that, I guess it's pretty obvious bank
adoption would drive the price up. I'm going to try to see how I see the future
value of XRP. A lot of people in crypto always talk about market cap, they measure
it by the value Bitcoin has and then divide the share they assume the coin they
discuss to have a certain value of that in the future. Conservative thought,
weird to see in the crypto space as we all try to fight the world from being
too conservative about crypto. Yes, of course, if the value of bitcoin goes to
100.000 USD, the rest of the alts do move along with it, but is there really a
maximum by stating up front that the market cap of a coin should never pass
bitcoin?
The artificial limit in extend
to bitcoin
In crypto - not passing bitcoin as bitcoin is sacred might be an obstacle
that will remain for many years. But you will have to understand that XRP is
different. XRP doesn't move in the cryptoworld like the other crypto's do. We
already see that even after announcing great news, the tops and bottoms are
less volatile than the other crypto's. What will happen when the volume really
kicks in? People are saying 'banks will never pay more than a few $ per XRP as
it would mean the transactions will cost too much for it to be the top pick'
but is this true? Transaction costs can be scaled down in the future when
needed, and knowing that Ripple wants XRP to remain the cheapest, it's unlikely
that they wouldn't change it.
Another thing I hear a lot is that banks would not be interested in a
higher priced XRP as they would 'not be willing to pay for it' but that's the
exact opposite of what will happen. XRP is a vessel, the larger XRP will have
as value, the more value can be transferred. And banks have a lot of value to
transfer. This would mean that banks would benefit if the price of XRP goes
upwards. How far can it go? Well, in my understanding, it would go as high as
the banks need it to be. If they want to transfer a trillion payments per day,
they will quickly run out of XRP and will have to buy more. So, the price will
keep increasing once it is adopted and used.
The limit of XRP
What will be the limit? Well, that is hard to estimate, when more and more
banks use it, less XRP is there to go around so the price of XRP must go up
from that point. There will be a moment in time where the price is 'satisfying'
and should be stable from that point, you can then see XRP as a currency. And
what about the market cap? Well you can calculate one, but will it limit the
price? No! And why not? because the use case doesn’t care for the market cap as
a limit but as a starting point. 'today we can send out x-amount of billion,
tomorrow this may be x trillion. The value should always be aimed higher for future
growth, so I can no longer say 'XRP could have a maximum amount of [random
number] in dollars'.
If you follow this path you might understand how bright the future for XRP
would be. It also indicates how insignificant we as 'traders' in regards to XRP
- our influence on the price will stop completely as soon as it’s being adopted
by the banks, we will just ride along with the world as XRP will be used more
often and perhaps create more use cases, like the XRP credit card where it
would be possible to pair with all currencies in the world so you would no
longer need to have 10 different currency bank accounts as a business who
trades overseas.
Conclusion
In the future, the value of XRP is unlimited as the market cap is
unlimited. There is no reason why it should 'stay in the path created by
Bitcoin' as it has no correlation with Bitcoin nor bitcoin's value in the
future. If XRP goes to 10$ that would be great but it could easily go beyond
that if the banks are in need of a higher price to transfer money around. This
is my vision on the price and the reason why I'm seeing XRP as a solid long-term
investment!
I'm out,
Mr. H
Mr. H
Fantastic post - i have been trying to get this through peoples heads for a while now - you post is very much must have reading. One point i would make - banks do not need to OWN XRP per se - if there is an open marketplace or a few Market Makers (as Ripple envisages would happen to keep the price stable) then a bank could quickly purchase 50B in XRP (lets say at $10/Coin) - transfer that almost instantaneously and the other party liquidates into their currency - at most you have a 10s round trip before that XRP is freed into the pool for the next transaction - this of course ignores the small amount that is burnt with each transaction. If you take the Capex movement market as being worth $5Trillion per day and XRP can get 10% of that initially - that equates to $500B being moved - even if all 100B tokens were in circulation (55B are tied up in monthly escrow) that would mean if each token was cycled only once per day a token would need to be worth $5
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