Introduction
In this Series "Altcoins Survival" we will look at interesting altcoins. Let us see if they can survive the wild landscape of the Blockchain. In this second part, we gonna look at an altcoin that is not fully decentralized but claims to be the best alternative for payments. Let us see what is the right of existence for Ripple XRP.
In my introduction post and part 1 of this series, I told about my vision of the blockchain and the reason for my investments.
It was 6 months ago I started my first serious trade in cryptocurrencies. That moment was the start of something beautiful. Because my decisions are based on own investigations I started reading all information I could find about interesting coins. I began to see it in a bigger perspective, realizing cryptocurrencies can drastically change our world in a positive manner.
In 2005 I finished my study in economics, most important I learned is that fiat money is evil. It does not help us but rules us. I know humanity will not evolve to a unity as long as we have an economy based on money. Therefore we should get an economy based on ideas and knowledge. The moment I saw blockchain technology is able to make this change was my eye-opener. I invested in more cryptocurrencies and now I am here at steemit to share my ideas, beautiful moments and all I think is good to share with other people.
I will not give you any advice but would love to share my knowledge with you. Enjoy!
Ripple
What is Ripple?
When asked what Ripple is, most people will answer that it is the umpteenth cryptocurrency. However, Ripple is short of this. Ripple is much more than just a cryptocurrency like Bitcoin.
Ripple is initially not a currency. It is a back-end infrastructure and not a ready-made consumer product. Ripple is an open-end platform for a global exchange of everything of value. Everyone has access and everyone has the same rights to this "global exchange".
Real-Time Payment Protocol
Ripple is a real-time payment protocol for everything of value. It is a shared public database with a built-in currency exchange. Ripple is a "scout algorithm" that finds the best way for a euro to become a dollar, or the conversion from English Pound to Bitcoin, etc. All conceivable combinations are possible. It looks at all orders in the global order book. Everyone can put a bid and/or ask price for everything of value. The ripple protocol leads transaction to the best price in the market at that time.
Centrally Regulated
One of the big differences between Ripple and Bitcoin is that Ripple was developed and is published by the fin-tech company Ripple labs. Bitcoin is completely decentralized while Ripple is centrally regulated by Ripple Labs. While Bitcoin is seen by most major banks as a threat to their role and hegemony in the financial markets, Ripple is embraced by them. There are already several major banks that invest in and work with Ripple. Banks can realize significant cost reductions in the international payment system by means of Ripple, while still retaining their role in it.
How Does It Works?
Banks are performing a lot of transactions worldwide every day. For this transactions, they have to pay transaction costs in euro or dollar. By using the Ripple network for this transactions they have two big advantages. The transactions are completed within four seconds and the transaction costs are much lower.
If a bank starts with using Ripple for their payments they buy an amount of XRP. Let's say they buy 1 billion XRP. They need them to use it for their internal system. For example, if a bank wants to transfer 1 million euro's to dollars and the XRP value is € 1,=. They need 1 million ripples to make this transfer. A little more for the transaction costs but for this example we don't look at that. When sending this transaction the 1 million euro are converted to 1 million ripples and the 1 million ripple are being used to buy dollars for the amount of 1 million ripples. These transactions need 8 seconds in total so the valutary risks are almosts being eliminated, saying they are minimalized to 8 seconds. The bank pay transaction fees in XRP and that fees will be destroyed. The bank saves money, but also time. For banks, it is very important to use their money if needed and when a big transaction like these is completed in 8 seconds (2 transactions of four seconds) they have dollars that they can use for their business.
I heard many investors making one and the same big mistake when saying that 100 billion XRP won't let XRP rise in value. As an economist, i will explain why this is not true. All banks that use the ripple network buy XRP for their internal paying network. To be able to perform transactions in XRP. So, in fact, all XRP being used by banks are not tradable anymore form the moment they bought them. The banks bought them, they use them for internal payments, but not selling them. If started with 100 billion coins there comes a point where all banks that use XRP bought the available amount of coins. Only normal investors like you and me are trading XRP on exchanges. Because of the biggest amount of XRP is in hands of the banks the tradable amount of coins drastically decreases. The investment market is a market of ask and demand. In this case, offered amount drastically decreases. In fact, it is very simple. Thinking like an economist is logical thinking. Just try to make a conclusion step-by-step. When doing this you can see that in this case the price logically goes up. And how far? I don't know, but I can tell you one thing. Never say "the market is not able to do that"!
Built-in Currency
XRP
Ripple has a built-in currency: XRP and this is the underlying value of all transactions done in the Ripple network. The transaction costs for the Ripple currency transactions are settled in XRP. Nobody receives these transaction costs. It is immediately destroyed after the transaction completes. It is only intended to attack cyber attacks by flooding (at the same time giving up a huge amount of orders).
XRP transactions are fast. Faster than those with Bitcoin. An average XRP transaction is settled within four seconds.
Ripple / XRP thus has a bridging function between all currencies, possessions and things of value. If a currency is liquid with respect to Ripple then it is also liquid with respect to all other currencies.
So Ripple has some strong characteristics. These are:
- Access: Connectivity across payment networks
- Speed: Instant, on-demand settlement
- Certainty: Real-time traceability of funds
- Costs: Low operational and liquidity costs
Growing Global Network
Banks, payment providers, and digital asset exchanges process and provide liquidity for payments on RippleNet. For now, Ripple has more than 175 customers and this network is growing.
Team
The team of Ripple looks steady. They have much knowledge and years of experience. Also, a CEO that led more than one million dollar companies to a success.
Financial
How Ripple Creates Value
Ripple his design provides for a maximum number of 100 billion XRP. More will never be there. This makes Ripple interesting for investors. After all, an increasing demand for XRP, with a constant amount of XRP in circulation, will result in a rising XRP rate.
Exchanges
For now, Ripple is tradable on 123 exchanges worldwide. The list of exchanges can be found here.
Price
Price of 1 XRP = $ 0.79
In my opinion price of XRP is still to low. But we are in a highly volatile market in a time that every tiny rumor has a big influence on the markets. Still, circumstances where ripple is one of the steadiest coins to hold his value.
I bought my first XRP in July 2017 for approximately $0.19. Most investors that time said I won't make money with that. That's the second lesson in this part of altcoins survival. Always make your own conclusions and if you think it's a good investment handle to it. Remember that the value at this moment is the price of the expectations of the market. Always try to be 1 step ahead on the market.
Always take your own decisions. "Only dead fishes go with the flow".
Conclusion
We just learned a couple of new things about ripple and XRP. One of the most important things about this cryptocurrency is the way it is adopted by the financial sector. That is because there are some big advantages this product offers to financials. It reduces costs, saves time and it is easy to use. Because I think this coin has much potential and also right of existence I explained you one of the biggest mistakes investors make by analyzing this coin. Now you are also able to analyze like an economist just by logical thinking and step-by-step analyzing. Also remember the current value is the price based on the expectations of the market. If you think these expectations are not true, be smarter than the market!
Next time part 3 of this series. Thank you for reading and until the next part!
Links
Series
Posted on Utopian.io - Rewarding Open Source Contributors
