kperMan
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Why Ripple $XRP will TANK - hint: it's mathematically overvalued

BITSTAMP:XRPUSD   Ripple / Dollar
I'm not going to give you all the common reasons why people don't like Ripple - I won't go into ideology, or point my fingers and big bank involvement, or how the founders are hoarding 80% of the XRP coins. Let's put that aside. Let's look at Ripple for what it is, and why even if they were successful in everything they're trying to do, its valuation makes no sense. It can only grow based on hype, not on actual usage, and that's a dangerous game.

What is Ripple and for what is it supposed to be utilized (once they've evolved from growth investors)?
Basically, if you’ve ever done a Wire transfer between banks aka SWIFT payment, that is what Ripple is attempting to replace. So it’s not a full-on ‘currency’ per se, but rather a transport layer in which the currency you want to send is converted to, transferred, and then converted into its output that the recipient wants. Ripple can do in a few seconds what takes wire/swift payments maybe a day or more. Though this advantage is also what makes it overvalued because no one needs to hold ripple longer than a few seconds. This is also why they’ve been forcing Ripple wallet holders to hold a certain minimum amount of Ripple in their wallets in order to use the service.

Why is Ripple mathematically overvalued?
Each day 15 trillion dollars is transported in Wire/SWIFT form according to this US Treasury document. There are 86,400 seconds in a day. Assume that Ripple takes over 100% of that market (that's a stretch but let's go with it just to make a point). Assume that each transaction takes 1 second (though this is easy to adjust and doesn't make much difference). $15,000,000,000,000/86,400 seconds = $173,611,111 needing to be in Ripple form at any given time. You might say "but Ripple doesn't take 1 second, it takes a few seconds." Okay fine, even if you say 10 seconds, that's still less than $2 billion dollars that needs to be in Ripple form at any given time. The current market cap of Ripple $XRPUSD is over $100 billion which is grossly overvalued in my opinion - people are buying it as an investment, not thinking about these numbers.

Can Ripple's management do anything about that?
Again, this is why they force users to keep a certain amount of Ripple in their wallets as a reserve, the amount that they've been asking to keep in it has reduced over time, as they've grown in volume . This is unlikely to get lower any time soon given that they'd have to justify and keep steady the enormous appreciation of value they've incurred in the last month...in fact it makes me wonder if they will raise the reserve levels to consolidate the expansion. That's very difficult to do. Slow growth was Ripple's friend. It allowed them to lower reserves gradually in an inverse proportional relationship to the volume of users. That geometric             harmony is gone...
Bình luận: Market education on Ripple has started driving the price down even further, and that will continue to trend.
Bình luận: more massive bleeding today
Bình luận: Pretty symmetric collapse haha
agree with you, although like the other guy said probably those banking calculations are too overly simplified, but what would you say would be the true value of a ripple coin? let's say if only people used it. as I doubt banks will use this bullshit. ripple though has in interest to keep the currency stable to make it more appealing to banks, so after awhile with there escrow it will just make the price flat fall flat. maybe in 10 years 1 xrp could be worth $1 if it wasn't so centralized and people trusted it more, i just come here to laugh at all the people who think this is going to the moon. more like $1 is the best case scenario and even at that I think that's over priced. but the only reason there is low transaction fees is because ripple is making so much money hoarding all the xrp, but once it runs out of escrow, they will need to keep those transaction fees or print new coins to keep the servers running
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Market education on Ripple has started driving the price down even further, and that will continue to trend.
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Please read this article https://www.coindesk.com/100-billion-controversy-xrps-surge-raises-hard-questions-ripple/ and form your own opinion. Apparently the XRP token has very little to do with a potential bank usage. The banks will only use Ripple's (as company) platform. So the banks will never need the XRP tokens. If you think about it, it's logical that no big bang would enter into the usage of a XRP token when there is such an uncertainty (volatility) with regard of its price.
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@simbr, yup. and not to mention there is much more money in forming their own coins. they sure as hell aren't saying their prayers for Ripple. https://www.coindesk.com/jpmorgan-integrates-zcash-privacy-tech-enterprise-blockchain/
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Why can't XRP Match bitcoins market cap before the banks even use it? If it do that it would be at $6 even without bank use. What about Goldman Sachs opening a Cryptocurrency trading desk? What about Michael Arlingtons $100 Million Hedge Fund? Institutional investors are going to love XRP more than any other coin because of the team behind it and the advanced technology. What about all the other possible use cases for XRP?

Seems like you've left a lot out of your calculations.
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bkv1182 bkv1182
@bkv1182, Also banks will likely keep large reserves of XRP on hand if that is the method of transfer they are going to use.
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@bkv1182, Banks wouldn't do that as it defeats the purpose of having a transport layer, but fine. Okay...let's speculate that. So assuming that the transactions take a long 10 seconds, and assuming Ripple takes 100% of the market share from Wire/SWIFT. And assuming banks keep 10 times as much Ripple, even though they absolutely don't need to. And assuming there is 0 competition from Stellar or anyone else.... that's still LESS than <$20 billion dollars my friend.
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@bkv1182, yeah banks will never hold this, its used to send quick transactions, not as a speculative asset. That being said, the more banks use it, the more its value will rise because it would be necessary in order to fulfill a high volume of orders. I sold 51% of my XRP at 2.8 USD, its now at 2.27 so I guess I didnt make the wrong choice, hoping to sell 25% at $5 and 25% at $10 some time in the near future though
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kperMan PRO oink6oink47
@oink6oink47, another thing is as a 0-1 trend, we are becoming more decentralized as global members of the financial asset holding community, and away from the direction of being centralized Not to get too broad or philosophical but we only needed banks in the first place because we needed to keep our money somewhere instead of burying it under our house some keeping a giant home safe. It was the protection o that giant VAULT that got us to do it in the old days. That's all changing, but noobs don't understand distributed stakeholding yet - that's why they buy this overinflated asset. When they learn about it they sell their XRP realizing how silly it is.
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@kperMan,
I find your argument Intriguing about why banks were a necessity.
I will agree with you that we no longer need a bank vault in the physical sense but it can't be denied that banks provide a considerable amount of security now in other ways like with credit and debit card fraud protection. This protects the money you have direct deposited and spend on a debit card instead of paying in physical money.

We have all heard about exchanges getting hacked and Bitcoin stolen. Was this loss insured? Did these people get their money back? Are the exchanges liable? Isn't it implied that you pay for their service that they secure and protect your currency? Bitcoin has a limited number of coins and we know many have been lost forever from hard drives crashing, going into a landfill accidentally or a paper wallet being lost or stolen. Is that just the unfortunate reality of a decentralized currency?
Didn't we get away from using physical currency because it can be lost, stolen, destroyed and not replaced?
We all can agree that physical money is not convenient. We disagree with what is needed to replace it.

What I see from exchanges is not to leave money in a wallet on their exchange. Of course they still want you to put it on to do business so they came make their money without taking responsibility for the security. They also charge you to move your money off the exchange lol. Does the bank charge you money to withdraw cash at their ATM or physical branch?

Our system with federally backed, insured currency protects you and I. Crypto; without all the security and assurance can't replace our current centralized currencies.
Maybe that is where RFID's come in. Like waving a phone at Starbucks but with an embedded RFID on your person. Of course then you are fulfilling Biblical prophecy about the end of days on earth so you may have some resistance on that.


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