The XRP cryptocurrency from Ripple has been called the ‘new Bitcoin’.
It’s a cryptocurrency supporting a company, Ripple, in disrupting the archaic banking payment industry with the latest Web3 technology.
More transactions per second plus faster money transfers and reduced fees for consumers, Ripple certainly has an attractive offering for banks and customers alike.
If the banking industry adopted Web3 as well as Ripples Web3 service, and the XRP coin became the de facto token for the transfer of converted global payments, it could send the value of XRP through the roof.
Banks have started to slowly get on board. They probably realize the inevitable change is coming, and this change has been in the making since 2004.
2004 marks the year Ripple first launched as a company but under the name of RipplePay. It took a further 8 years before the first XRP cryptocurrency trade was made.
This means XRP is no new token. It’s been around for over 10 years now.
Its age is certainly attributing to its high market capital and has regularly been within the top 10 market capital cryptocurrencies for over 18 months now.
This is a strength, but it is also a weakness too.
Let’s look further into the Ripple company behind XRP and what factors are likely to see an increase in value of the XRP token now and over the next 3 to 5 years.
When RipplePay founded way back in 2004 it has a single goal to disrupt the long standing old and slow banking system.
Little did they think that almost twenty years later things haven’t progressed very far.
Local bank to bank transfers have sped up, but the moment multiple currencies are involved, overseas banks and intermediaries converting the dollar, things begin to wade in treacle.
Overseas bank transfers can take anywhere between same day to 14 days to complete, depending on the banks, the value, and the complexity of the trade.
Although headway has been made, and banks have begun to get on board, they haven’t seen the success of other banking and financial disrupters from a similar period such as PayPal and Stripe, who both went on to become multi-billion dollar companies and used by hundreds of millions of people.
RipplePay saw the power of Web3, the blockchain and the cryptocurrency Bitcoin and launched their own token, XRP.
XRP was designed to become the trading token of the system.
Instead of cash being exchanged with heavy FX fees, and time delays between banks, it would mean banks could fulfil the overseas transaction in cryptocurrency that was the same globally.
If someone in US sent 50,000 XRP to someone in Australia, the person in Australia would receive 50,000 XRP, minus a very small fee.
Not only would the transfer be complete with a much smaller fee, but it would be almost instantaneous.
No waiting up to 14 days for the receipt of funds.
Just the very sound of this appears that it would be welcomed the world over.
The banks get a kick back through the fees, so they wouldn’t necessarily want to be jumping up and down at the excitement reducing fees but helping customers with faster transfer would be in their interest.
Why XRP would Increase in Value
All cryptocurrency, like stock, shares, NFTs and most tradable assets work on the same laws of equilibrium pricing, which is the supply and demand model.
When demand is high the price increases.
When demand is low the price decreases.
If the global banks implement Ripple’s money transfer solution, and they also adopt the XRP cryptocurrency for each trade, it will considerably increase the demand for the XRP token and inevitably increase the price.
Although as of right now XRP has a market capital of $22 billion and is the sixth highest market cap cryptocurrency available.
This is already 5 times bigger than both Metaverse’s (Sandbox and Decentraland) combined!
Money has pumped in to XRP for years, and with the demand the price increased. The relatively low trading price of $0.50, compared to that of Bitcoin’s $20k, isn’t down to the value of the coin, but how many coins are in supply.
There are far more XRP tokens than Bitcoin, hence XRP’s low price per coin.
The higher the market capital the more difficult substantial growth is for any company.
The sizeable market capital isn’t the only reason XRP may struggle to achieve the heights Ripple and their supporters are hoping for.
XRP may not be used at all.
Recommended Reading: Can XRP reach $10 or even $100 a coin
Could XRP Fail and go to Zero
Ripples payment service looks a good offering and has many advantages.
The problem for XRP fans is that by adopting the Ripple payment solution, XRP does not have to be used.
The banks can continue to trade in dollars, gold, or any other cryptocurrency they choose.
XRP is just there to be used as well.
The lack of exclusivity for XRP on the Ripple platform is great for Ripple but a blow for XRP holders.
Cryptocurrency is widely known as volatile, but the crash of 2022 has seen a much more widespread uncertainty, and even panic at the thought of using as a legitimate trading source.
Over the past century we have all become accustomed to ways of the banking world and sending money costs both in fees and extra in conversion loss between currencies.
Imagine halfway through a trade, the Ripple company or XRP token was delivered some bad news and as a result it sent the price down by 50% overnight.
Someone sending $20,000 of XRP may find that the recipient can only cash it out for $10,000. It wouldn’t go down very well.
This has long been the banking systems concern over the use of cryptocurrency and why many seek legislation and control in a decentralized and unregulated industry.
If banks implement Ripple’s solution but continue to trade in currency or decide to use another cryptocurrency, such as Bitcoin for example, then there would be no reason for demand in XRP to increase and the price would stagnate, go down or even crash to zero.
The likely Outcome – In Conclusion
With legislation to strengthen the resilience of cryptocurrency, and create a less volatile space, as well as the banks adopting the Ripple service and them pushing the XRP token for trading, we could see large increases to the coin.
In the event of this perfect storm, we could see the market capital of XRP surpassing that of even Bitcoin, which would result in a return equal to 14 times any purchase of XRP made now.
These though are very big ifs.
Although there is much talk of legislation its something the decentralized brigade are fighting with all their might. They went into Bitcoin, Ethereum and other cryptocurrencies for a decentralized way of life, away from corporate control and put the control of the financial and media institutions back in the public control.
On the other hand, without legislation we will continue to see heavy volatile swings in the cryptocurrency market as well as continued scams and rug pulls in the NFT world.
Something is needed.
Banks are certainly talking with Ripple, but XRP isn’t being pushed as heavy as some critics would like.
XRP has a lot of supporters, and legislation looks likely so it would be hard to consider the possibility that XRP will not increase over the next 5 years, but the cryptocurrency industry changes monthly – and no one has a crystal ball!