Why Ripple Token (XRP) is Terribly Overvalued
XRP token and Ripple Payment Protocol are Different
Ripple is a global settlement network which allows banks to transfer money and settle international payments in different currencies. As more banks use Ripple protocol, it is becoming more valuable.
Contrary to popular belief, XRP currency is different than the Ripple protocol. XRP is a token or a native currency that works under Ripple Transaction Protocol. XRP protects the Ripple network from DDOS attacks, and prevents spam.
Do Banks really invest in XRP?
Banks do not invest, buy or hold XRP tokens.
There are banks working with Ripple company, and they may be making payments to the Ripple company per their use of the Ripple protocol.
Real Value of XRP
Certain amount of XRP is being destroyed to cover transaction fees. Currently, the default transaction fee is 10 drops (0.00001 XRP).
As an example, only 10 XRP tokens need to be destroyed if a bank needs to settle 1 million transactions in one year.
To have a better understanding of the real value of XRP, we need to know its destruction rate.
From the inception of XRP to 10/12/2019, only 0.00867% of the entire supply has been destroyed. On the other hand, there has been no significant change on the destruction rate over time.
With this rate, we will need around 70,000 (seventy thousand) years to consume all XRPs. Sadly, none of us will live that long. In reality, it is very likely that technologies like Ripple network will be outdated and useless 1000 years from now.
In other words, it does not make any sense to invest in an asset with the assumption that it has a chance to become scarce thousands of years from now.
Why Did XRP Skyrocketed?
To summarize:
Majority of people do not understand that Ripple payment protocol and XRP are different. When a private investor invests in Ripple company, people assume that the valuation of XRP should also increase. However, XRP token's valuation and Ripple company's financial situation are irrelevant.
Due to the fact that there are 100 billion XRPs created, the XRP price is low compared to other cryptocurrencies. As a result, new people who invest in cryptocurrencies ignore the market cap, and they think that XRP is very cheap and should go way higher.
As Ripple company holds the majority of XRPs, the amount of XRPs in circulation is significantly low.
Since XRP price increased to unexpected levels, those who shorted XRP got liquidated and had to buy back from higher prices. These short squeezes caused the price move even higher.
With the price increase, the volume also increased to astronomical levels. As such, more exchanges listed XRP.
Ripple company has been doing a great job on getting their token listed on almost all major local exchanges. Local exchanges are the place where new users begin their trading activities, and it is always easy to attract those newcomers by announcing partnerships with banks.
An important portion of the XRP circulating supply is restricted, which means most of the XRPs reported as circulating can not be moved. As a result, XRP market cap has been wildly overstated and does not reflect the truth. This overstated market cap has undoubtedly led many institutional investors to invest in XRP.
Source: https://messari.io/article/messari-research-ripple-s-market-cap-is-likely-overstated-by-6-1-billion
I hope this article will be helpful.
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Reading this now, would be interesting to hear your opinion of XRP for the coming months, if you've stayed the same with your opinions or different.
me too. I am keen to hear your (@primeer) new opinion.
🚀🚀🚀🚀 Thank you RIPPLE for my first lamborghini!!!
https://steemit.com/ripple/@karolynaz/thank-you-ripple-for-my-first-lamborghini-omg-please-share-if-you-like-ripple
Despite doubling trading XRP I personally still agree with most of OP's opinions and believe XRP is overvalued.
Thanks a lot for your descriptive post about Ripple.
I would love to see a follow-up to this article in the New Year. The market placed has changed drastically and "the people" have decided that XRP is worth something to them. Are they just ignorant, or is there real value to the coin?
Haha same here, I'd love to hear a new perspective. I went through the Ripple developer site, and everything the author mentioned is true.
XRP price has skyrocketed way high ... but it's due to rumors of Coinbase wanting to list it.
Still not going to buy XRP.
Wait until you see XRP blow up now that Western Union signed on. There is more to come. Market cap of XRP is only 7% away now from the other 1,290+ coins out there that total 22% of crypto market cap. BTC now at 36%. XRP will be #1 Market cap coin in 2 months or less.
I'm sorry to say, but that will never happen.
What will never happen? #1 Marketcap? Ok, we'll see. Many said #4, #3, #2 would never happen.....we'll just have to see. I believe BTC is going to get shorted and wrecked here especially due to its speed and cost as well as the Wall Street boys messing with it. XRP has a bright future in my opinion. I am in since $0.17 and $0.20 so I am happy with where it is at and anything over $0.50 is cream to me.
Same. Very reasonable analysis. I'm following you. :)
Very interesting summary about ripple. I learned a lot from this article. Followed for more analysis.
Thanks!
Same. Very nice analysis. I'm following you. :)
So if i understood well, the price of XRP is not going so far like bitcoin or other cryptocurrency did ?
Where do I short tokens?
Ripple is the king of shitcoins. If you are into Ripple, you are against the very ideology of blockchain, against free market and freedom in general.
Choose the future you want to build with your wealth wisely or crash with your friends banksters. Natural selection... ;)
https://steemit.com/cryptocurrency/@evolutionnow/how-to-make-millions-on-shitcoins
well said
that is completely wrong. Ripple is the company. XRP is decentralized, public, and everything that blockchain STANDS FOR. Nodes are maintained by ANYONE.It is also OPEN SOURCE.
Bitcoin will be using centralized nodes for its lightening network, and has pool mining which is centralized 101, but you think xrp is against the original blockchain ideas?? you are cearly just repeating info too lazy to do your own research.
Ripple labs is using it for FI's, but xrp will be used for merchant payments, p2p payments, everything we see these other SHIT coins trying to obtain. XRP settles instantly, and does not waste electricity. It out performs any other coin, and it only cost pennies tor send ! It will be the top crypto. People who cant understand the difference between a company who makes a software the uses a crypto, and an actual digital asset, will loose out. Natural selection I guess.
You are correct, many investors don't realize that Ripple and XRP are two different entities. However, I do disagree with you in regards to XRP being overpriced. Right now Ripple is in process of getting banks to utilize their software. Banks may utilize Ripple's software and opt to never use XRP (Ripple's cross-border cryptocurrency) However, banks that decide to use XRP will be able to complete inter-country fiat transfers in 4 seconds. If banks decide to use another inter-country payment type they will lose some of the speed XRP provides. Next, while XRP is considerably larger in total units circulating when compared to Bitcoin or Ethereum this is so because Ripple is not promoting this coin to individual investors but rather to banks. Banks across the world move trillions of dollars among their facilities in any given year. If banks decide to adopt XRP as their inter-country transfer method 100 billion XRP will be needed. The below link shows total dollar figures for money movement just in the US (Fed Reserve).
https://www.federalreserve.gov/paymentsystems/fedfunds_ann.htm
Also, everyone seems to indicate that banks will not adopt the use of XRP. Once Ripple hooks banks with their block-chain technology their secondary push (besides speed) will be the cost savings associated with using XRP. Ripple will be able to effectively lower bank remittance cost by 60%. See below link.
https://ripple.com/insights/ripple-and-xrp-can-cut-banks-global-settlement-costs-up-to-60-percent/
Also, the link below signals and proves that banks are willing to try XRP (speed and cost reduction). Cuallix, and national bank in Mexico, is the first to utilize XRP as a way to save money for inter-country transfers.
https://www.cnbc.com/2017/10/10/ripple-has-over-100-clients-as-mainstream-finance-warms-to-blockchain.html
It's still not to early to consider investing in XRP. It's definitely a long term hold (7-10 years), but IMO it will make many people rich.
I agree with you, Even if Ripple only owns 1% of the market share that uses XRP token. 100 billion XRP tokens at current price is still too low.
From the recent updates we can also see that they are growing very fast with XRP tokens!
@primeer Thanks for post
For interesting read for ripple https://steemit.com/cryptocurrency/@pps/ripple-things-you-need-to-know-about-ripple
Ripple Ripple Ripple XRP - is where it is at. $0.30 by Jan. and $1.00 next year. The lockup will really boost it as well. Very stable and well supported coin with a tremendous employee base of experienced and knowledgeable people. Yes, it is not the ideal as it is heavily tied to the establishment, however I believe it will be one of the coins that lasts when the dust settles and 75% of the current crypto-coins are extinct. #ripplexrp wallet: rPVMhWBsfF9iMXYj3aAzJVkPDTFNSyWdKy Tag: 1317751799
Dang, only 30 cents? Hope you were able to hold on to $3.
Rule #1 for me is never mess with or sell my XRP. HODL
Id rather lose 1k or make a million. HODFL
just like in the internet crash, a few companies made it out. Amazon, apple and google. This is xrp in this world of shitcoins. They will be one of the few who take it to the next level. People dont realize that it is not tied to the establishment like they think. Ripple labs could close tomorrow, xrp and the network would continue and the organic use cases like merchant and p2p would continue to emerge. Ripple acknowledges these other use cases, and stated they want the coin to be used for them, they are just focusing on fi's because thats where world change will come from.
I made a small gain from XRP but got suspicious and pulled out. This article clarified my suspicions. Thank you.