By Gaurav S. Iyer, IFC Published : December 5, 2017
Ripple Price Update
Since it is a fairly slow day for Ripple news, we decided to spend today’s update going through criticisms of the cryptocurrency.
But before we do, just know that the Ripple to USD exchange rate is trading at around $0.249795, and the Ripple to Bitcoin rate is roughly 0.00002128 BTC at the time of writing.
Ripple vs XRP
Strategy is, by definition, a long-term game. Yet investors demand that Ripple fit its strategic vision fit into the time horizon they feel is appropriate for cryptocurrency investments.
“You want to connect all the banks in the world. Okay. What can you do for me right now?”
That’s the attitude.
Even so, there are legitimate criticisms of Ripple. One of them is that XRP remains adrift in an ocean of supply. There are simply too many coins and not enough demand.
There is some truth to this criticism because Ripple’s contracts with American Express Company (NYSE:AXP) and Standard Chartered PLC (LON:STAN) do not apply to the XRP price. They use Ripple’s blockchain, to be sure, but not its native token.
Ripple would likely respond by saying it’s taking baby steps. First, it is expanding its own market power by adding powerful financial institutions to its network. Then, it will encourage them to use its XRP token.
After all, XRP would enable banks to settle their international transactions within seconds, and they could do it in a trustless environment without any counterparty risk. These are non-trivial advantages, in my view.
Ripple Price Chart:
The XRP Supply Conspiracy
Some people buy the above argument, others do not. I personally find it more persuasive than Bitcoin’s whole schtick.
Everyone touts Bitcoin’s constrained money supply as a guarantee of higher prices, but that presumes demand stays level or continues to rise. And the reason why demand will rise?
Oh, because we’ll be drawn to a currency with a fixed supply. Everyone knows that’s what creates a stable financial system.
Except no, economic theory is split on whether that is a good idea. The gold standard, for instance, fell apart for being too rigid in the face of an economic crisis. And that’s why we have the fiat money system of today.
You need to read more than just Friedman and Hayek to justify boxing at this level. Spouting fringe economic ideas about central banks is simply not good enough.
What if BTC prices fail to stabilize, in part because of the fixed supply? How could it ever become a “global digital currency” without stability?
The simple answer is it cannot.
Ripple, on the other hand, can become the basis of common exchange before offering a currency to facilitate transactions.
In some ways, this is like Google offering the “Android” operating system to smartphone manufacturers for free. It seemed altruistic at first, but it was done to put Google apps head-and-shoulders above the competition in the new mobile landscape.
The Grand Ripple Conspiracy
But here’s where we get to the Grand Ripple Conspiracy Theory.
Some investors steer clear of Ripple because they think the company manipulates its price like a de facto central bank. They think that Ripple buys and sells in secret to stabilize its price.
To combat this perception, Ripple is temporarily locking up millions of XRP tokens that belong to the company. This would make it impossible for the company to interfere in its price trajectory.
Investors are using a narrow lens to look at Ripple, which is why many of them cannot see the big picture. None of these criticisms detract from our $2.00 Ripple price prediction for 2018.
Also Read: Ripple Price Predictions 2017: XRP Price Could Cross $1 Mark by End of Year