As promised, today’s Ripple news update delves into liquidity, interoperability, and XRP as a long-term value play. But first, I want to note that XRP prices surged 12.8% on Wednesday, bringing the XRP to USD exchange rate to $1.41.
It was a brief but gratifying moment of sunshine.
With that being said, let’s get back to the long-term arc of XRP prices. I’ve seen some interesting questions posed on Reddit and other forums. Investors seem to believe that XRP is in a bubble of some sort, or else that its end goal is unfeasible.
I want to address some of those concerns.
What Is XRP Supposed to Accomplish?
Many of you know I love XRP because it’s apolitical. It has no grand schemes. No vendetta against central banks. No blood feud with fiat currencies.
It is simply a tool for sending money anywhere in the world—quickly and at very little cost. This solves a specific problem in finance. Namely, that wire transfers are a terrible way to send money. Three to five business days? Please. XRP will close this window to four seconds.
And as icing on the cake, XRP frees up cash that banks used to settle international payments. That’s free money for banks! I’m sure a lot of them are eager for an unexpected windfall. So we expect to see a lot of institutional uptake in XRP over the next few years.
You Say That, but XRP Is Barely Used by Institutions.
This is true…for now. XRP has not established enough credibility with major banks, but I think it will get there. Remember that transfers only take four seconds. This means volatility in XRP prices won’t really impact money being sent over the ledger. Plus, XRP can be scaled to handle the same number of transactions as Visa Inc (NYSE:V). Can Bitcoin or Ethereum say the same thing?
But It Looks Like a Bubble…
Of course that’s what it looks like! XRP is a brand new technology that could disrupt a $75.0-trillion market. It will be overhyped. Investors will speculate. But over time, the volume of real transactions will overtake the volume of speculative investment, leading to a flatline of growth.
Put another way, this won’t last forever. XRP prices are growing incredibly fast right now, but it’ll eventually lose steam.
How Could You Possibly Know That?
Well, because that’s how innovation occurs. Economists have a model for it, known as the “S-Curve.” (Source: “The S-curve of diffusion of technology,” ResearchGate, last accessed January 24, 2018.)
This S-Curve is divided into four distinct stages through which all emerging technologies must pass.
- Bleeding Edge: Imagine Steve Jobs in his parents’ garage. Or Mark Zuckerberg in his college dorm room. Both were in the process of changing the world, but no one knew what was coming. That is the “bleeding edge.”
- Takeoff: Early adopters are interested in the tech. XRP entered this phase in 2017 when companies like American Express Company (NYSE:AXP) and Banco Santander, S.A. (BME:SAN) opened pilot programs with Ripple. But that’s only the start of the “takeoff.” When a second batch of adopters swoop in and the technology becomes popular then we’ve got complete launch.
- Maturity: When XRP has killed SWIFT, when every bank in the world sends money via XRP, then we might say the technology has peaked. But that day is years from now.
- Decay: Technology never stands still. Someday, XRP might calcify into an inefficient system and a new startup might rise to challenge its dominance. That is so far into the future that it’s almost ridiculous to think about it.
XRP is currently in the first half of the “takeoff” phase Its price is largely driven by speculation, but that’s not completely disastrous because it’ll grow into that valuation.
Analyst Take
I believe in the S-curve not just because it makes sense, but because I’ve seen it applied to dozens of technologies. As a result, I continue to believe in our $10.00 Ripple price prediction for 2018.
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