Ripple XRP, Is the Devil in the Details?

XRP is probably the most polarizing cryptocurrency we have on the market. It took me a lot of digging and research to understand Ripple and the alt coin XRP. I will try my best to regurgitate (man that sounds so much like a crane feedings its young). Haha No vomit here, just facts and opinion.

With Ripple I first asked myself, “how is it that a company like this represented by a coin could have that coin so cheap (today .19 cents in the sea of red) when it’s consistently top 3 in market capitalization? From Investopedia, this term, Market capitalization refers the total dollar market value of a company's outstanding shares. Commonly referred to as "market cap," it is calculated by multiplying a company's shares coins outstanding by the current market price of one share.

Market Capitalization http://www.investopedia.com/terms/m/marketcapitalization.asp#ixzz4mTC8ToDV

As of this writing, Ripple XRP is ranked number 3 behind Bitcoin and Etheruem with a market cap of $8,088,021,803. Count the commas, that’s over 8 Billion greenbacks. I kept digging and asking.
Ok so as I mentioned in a previous post, I’m down this rabbit hole only a month. But when I was sold on cryptocurrency, I wanted to buy Ripple mainly because it was cheap, but also because from what I understood at the time, it was one of the few with real world application actually implemented. Not expected, not on a roadmap for the distant future, but this technology is being used. By who? The Banks. Not just any small bank in some 3rd world nation (nothing against anyone in a 3rd world nation, I got love for all). The Ripple network is currently being used by the big banks around the world to quickly settle cross border transfers. These banks include names like Bank of America and Santander. See the link to Ripple’s website for a list of institutions.
https://ripple.com/network/financial-institutions/

Mind you there are nation specific central banks on board as well. They include England, Japan, Thailand and Cambodia, possibly more. Look it up.
The adoption of this technology has a domino affect for banks that don’t get on board, they will miss out. I will explain more later.

So why do the banks use Ripple and what problem does the technology solve
To understand the solution Ripple offers, one needs to understand how banks send money across borders. For example, if Bank of America has to send $ (we are talking millions to billions) to the Central Bank of Venezuela, it usually takes days and costs thousands of dollars to send. Ripple has proven that this wealth transfer can occur in minutes or less with phenomenal cost savings. Banks are a business, they know how to make money and make more money. Ripple’s technology gives them more money. Make no mistake, this does not translate to the average Joe and may never. This is about banks making more money by saving on these costs.
If all the big boys are on board and if the little guys fail to get on the network, they loose because the big boys can pressure them to use the cheaper faster network. I would imagine that in banking, a little bank wants to comply and also save themselves.

OK So I understand a little, but why is the coin so inexpensive?
I believe there are few reasons:

#1 - Crytpocurrency started out with Bitcoin as an alternative to government and centralization of money. It grew because people around the world feel repressed and a monetary exchange that has nothing to do with government or banks or any one governing body (funny I think the miners of Bitcoin have taken control, but I digress). Something that no one can control, it’s power to the people in it’s finest. Anonymous, non-traceable use of currency, “F U to the government and to the banks, this belongs to everyone and you can’t stop us”. I love it, the distribution of wealth and power, decentralization. So here comes this Ripple company. Ripple has actually been around for a long time. It was once called Ripple Pay, but became Ripple Labs and taken into a new direction. Some believe an ex banker or even the banks took over, but this is speculation. That was the first answer to my question. Ripple represents banks and not us. People who have been in the cryptocurrency space a while have strong views on this and will not invest in Ripple or buy the XRP token. Respect to you all and your convictions. I don’t feel the same way, but I respect you. I have my own convictions, but I also want to make money to better my condition and bless those connected to me. In reality, my stance on Ripple will change nada when it comes to the banks. No feeble protest will affect the banks, which one might argue are actually more powerful than some nations. So in the present moment, they will be around for a while, I hope to gain wealth and be a game changer in my own world. I can then deal minor blows on their playing field.

#2 – The company itself admittedly holds 50 Billion of the 90 Billion XRP or so out there. Note, you can’t mine XRP or make any more. They actually lower what’s in circulation slowly by destroying a portion of an XRP for every confirmed transaction. Please check me on this and how its done. People ask, “so what’s stopping them from releasing all these coins into the market and drive down the price? Nothing, until now. They heard the sentiment and came up with a plan to take company owned coins off the table, only to release them over a period of 5 years.

http://www.coindesk.com/ripple-pledges-lock-14-billion-xrp-cryptocurrency/

There is a lot of openness on how this is being done and can actually be monitored here:

https://ripple.com/build/amendments/#escrow

It is expected that when scarcity is added to the mix (a limited amount of coins available) the price has the potential to skyrocket.

#3 – This answer has a boatload of nuance to it. There is no right or wrong, definite anything.
Understand that Ripple, the company, is also the creator of something called the Inter Ledger Protocol. This is like a blockchain or accounting system for banks. The problem Ripple solves for banks appears to be able to be used without any token. The protocol is built on a trust system kinda like “hey I don’t know this guy, but if my friend vouches for him then ok, we can do business.” If there is a trust established the transfer can be made, but in ANY currency.

Hmmm. No XRP needed you say? Not exactly. Let me try to explain. The experiments and tests Ripple has won over the banks with was displayed using the XRP token. Banks were sold on this fairly quickly. A bank can lock up any money in XRP, send the XRP to the recipient bank across the network and boom, its done. The bank however does not need the XRP token to do this. It can use any form of currency. Please correct me if I a wrong here, but the ILP does not need the XRP token to work, it only needs a trust relationship. That being said, there is still value in using a token, where the bank can lock up funds in it and transfer XRP instantly. The receiving bank now has XRP at a certain value, but the exchange to local currency still has to occur so there’s that. On one hand, banks can adopt the XRP token as their universal coin and in essence have a Bitcoin for banks. All banks will need to own XRP or buy it in this scenario and it would be awesome for investors. On the other hand, banks can say, “we really don’t want to be held to this cryptocurrency, if we can use the network and save money anyway, let’s just do that using the Interledger Protocol. In that case Ripple does what they say, game over.

So what’s the point in all this blog?
To me for XRP it’s boom or bust as an investor. As an optimist I will hoard as much as I can afford at this current price. I simply want to be aware that this can go sideways and I can live with my gamble. Ripple can one day decide to change direction entirely (has been done before), no longer promote the token and focus on their customers who simply want the ledger protocol and save money. “Thanks cryptoheads for investing, but we no longer need use of the XRP token” down goes XRP. But on the other side there is the escrow at the end of the year, the fact that the token is being used in transactions now and the fact that the price of XRP seems suppressed from what I believe it should be. I feel like it will be huge or the exact opposite, but no in between. Hopefully all of this is food for thought, feel free to share your thoughts.

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