So as an investor/trader, I am trained to quiz people on the investments they take. This is part treasure-hunting, & part a process of disconfirming other’s ideas or disconfirming my own ideas. I particularly find it entertaining quizzing people on why they took a position in Ripple. I often get answers such as the following:
“It’s the big banks man”
“They can do cross-border stuff”
“It’s so cheap compared to the other ones mate”
My mid-to-longer term investment thesis in cryptocurrencies is that a lot of tokens & cryptocurrencies value will come down to the tokens use case & supply structure. So, with that being said, let’s dissect Ripple. First of all, there is Ripple the company, also known as Ripple Labs. Then, we have Ripple the token, also known as XRP. For the rest of this article, I will refer to Ripple the company as Ripple & Ripple the token as XRP.
So Ripple’s whole vision is to create what they call the “Internet of Value”. This is a concept where money can move as freely & as quickly as information. Given that information can move in nanosecond territory, this is a lofty goal. So here is the executive summary of the three main services Ripple Labs offer to achieve this vision along with a brief description:
xCurrent- This is an enterprise software solution for banks & financial institutions that is used to send & receive cross-border payments. Think SWIFT but with end-to-end tracking & bidirectional messaging.
xRapid- This is a low-cost liquidity solution for emerging markets. The goal is to use the XRP to lower the liquidity costs of making payments.
xVia- This allows users to send international payments through a bank or payment provider that is connected to RippleNet. The backbone of RippleNet is the Interledger Protocol which facilitates payments to be sent quickly across the network.
Duly note only one of the above services requires XRP. Furthermore, it should be noted that the xRapid solution is still in trial phase as of May 2018. Market cap for XRP is currently over $31 Billion. xVia & xCurrent can use the XRP but don’t necessitate it. Referring to XRP as Ripple leads to much confusion in differentiating between the company & token. Conclusions & implications are to be drawn personally by the reader.
Disclaimer: None of this is financial advice, for entertainment purposes only.