The Rise of the Crypto Revolutionary “Big 3” (Part 3: Ripple)

What is Ripple?

Ripple is essentially a purer form of Bitcoin. Virtually nothing in between a buyer/seller or a contract. It’s going back to basics to when 2 people would trade goods that would be light speed and can be done virtually anywhere. To quote Ripple’s chief Cryptographer David Schwarts, “Payment systems today are where email was in the early ‘80s. Every provider built their own system for their customers and if people used different systems they couldn’t easily interact with each other. Ripple is designed to connect different payment systems together.”

Here’s our current overview of Ripple:

Approximate Market Supply*: $94 million

Current Market Cap*: $28 Billion (Rank:1)

Why Ripple may succeed:

When I heard of the idea of a currency without borders that can move all over the world in a short amount of time, I thought of specific applications that would be most beneficial. My first thought was remittances, and that led me to Ripple and XRP. Ripple’s focus is specifically creating software that can move money globally, in seconds, and they have actively sought out banks to sign on to their protocol. Ripple claims that they can save banks 60% on their international financial transactions, and at the time of publication, over 75 banks- including Bank of America, BBVA, Santander, and UBS have signed on to use their service. To give you an idea of how much money is
transferred around the world, Western Union’s annual revenue in 2016 was $5.42 billion (this does not account for the amount of money they moved, just how much they made), the Foreign Exchange market saw $5.1 trillion a DAY change hands in 2013, and the SWIFT network – the current standard in bank money transfers- recorded over 6.5 billion transactions in 2016. All of these transactions have high costs associated with them relative to Ripple, giving the currency a big opportunity to change and quickly gain a large share of this market.

Why it may not:

One important thing to know about Ripple, is that there are two sides to it- the company and the currency. The company has a software network that can provide many of these transactions without using the currency. Apparently using the software without the native currency is more expensive than using XRP, but still cheaper than current systems. While many of the banks that have signed on with Ripple are testing transactions with XRP, they may choose to not do so in the future.

Also, what is to stop SWIFT and ForEx from developing their own systems- with our without a crypto currency component? Finally, unlike most other cryptos, all of the currency was “premined” in advanced, with over 60% of the currency currently held in reserve. Contrary to bitcoin, this makes Ripple, a centralized currency, with the company able to act as a “Virtual Reserve Bank”. Finally, only approximately 5-7% of Ripple traded currently is on its network- the rest of the activity around ripple is speculative investment on the online exchanges. Still- it is important to note that this currency is currently implementing commercial applications. With so much of its currency in supply and circulation, it will take MUCH more significant changes in the market to reach, say $10, $50, or even $100 dollars.

If Ripple had the approximate market capitalization of Ethereum, its value would rise to only $.65. At a $40 billion market capitalization it’s value would be approximately $1.05/XRP. For Ripple to reach $10, it would need a market cap of around $380 billion. While this is theoretically possible, it would require an almost revolutionary shift in the global banking system.

The Rise of the Crypto Revolutionary “Big 3” (Part 2: Etherium)

How Bitcoin Has Disrupted Every Central Bank