Why Ripple $XRP will TANK - hint: it's mathematically overvalued
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...
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...
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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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more massive bleeding today
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Pretty symmetric collapse haha
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told ya. to those who listened, good job. to those who didn't, you were warned. :)