Ripple Price & How It Could Work Together with Mastercard and Visa
Ripple or XRP is a Cryptocurrency, created for Financial Institutions and payment processing companies and has a pretty clear and defined Use-Case of transferring value without the need of ridiculous transaction fees.
Ripple has been making waves in the cryptocurrency market last year, making its way to the fourth place in the top cryptocurrencies just right below Ethereum (ETH). Ripple was first created to help lessen transactions fees between individuals and financial institutions all over the world. Although the aim of Ripple can really benefit people, its centralized nature threw off a lot of people in the cryptocurrency community because it wasn’t exactly consistent with the decentralized nature of the blockchain technology that runs the crypto market in the first place.
The following article is a projection and not an investment advice. As stated in an earlier article when I wrote “Do not underestimate Ripple“, I didn’t change my opinion even without beeing a fan of the idea or the coin itself.
So, why exactly has Ripple made such a big ruckus in the community?
Well, in order to know this, it’s very important to first look at the processing fees charged by Credit card companies and the transaction fees of Bitcoin. These fees are the most interesting things to look at. You might be asking yourself why Bitcoin is included when I mention fees. After all, Bitcoin is supposed to have a decentralized structure since it’s the community itself that runs it, unlike the credit card companies. While it is true that no one regulates Bitcoin and that governments can’t touch it unless they turn off electricity on a global scale, it is still a very young piece of technology. Due to this, there are still many technological issues that need to be solved if Bitcoin is to continue its expansion. Due to this very reason, Bitcoin still needs to have high fees so that these issues may be addressed in the long term.
Of course, this doesn’t mean that nothing was done. A team comprised of the original Bitcoin community members decided to put up their own supporting fork today known as Bitcoin Cash or BCH. The team, led by Jihan Wu and Roger Ver, aimed to speed up the process of Bitcoin becoming a payment medium for remittances around the world which was the original purpose of Bitcoin. We can see this in the original white paper of Bitcoin which was created by Satoshi Nakamoto, the “founder” of Bitcoin.
The white paper states, “Bitcoin: A Peer to Peer Electronic Cash System”.
The key principle behind the white paper is the phrase Peer to Peer which means people to people and no third party included. With regard to Bitcoin, it is not regulated by any central governing body. However, it’s interesting to note that it still relies on the movements of a rather centralized team of Bitcoin miners who support the entire system. Also, the miners are usually influenced by a group of people who are able to pose threats consisting of 51% of attacks onto the Proof of Work Bitcoin Network.
What most people don’t know is that this 51% of potential attacks are blocked because a big majority of the hash power of the network is evenly distributed among people. This is different as compared to the hash power distributed among workers doing the mining in one office building. We can say that since Bitcoin Cash does not present the same peer to peer characteristics as Bitcoin, it is centralized and is quite comparable to Ripple since Ripple is another centralized blockchain system. So, if you know how Bitcoin and Bitcoin Cash are different, you’ll somehow have an idea of how Ripple works.
Bitcoin Cash: A Centralized Crypto With Decentralized Network
Now, it is also very important to take note that Bitcoin Cash is a centralized cryptocurrency that makes use of a decentralized network, the blockchain network. This in itself may hinder the growth of Bitcoin Cash because it may hinder security as well. When it comes to blockchain technology, security is a much bigger factor than being the first on the market. In fact, according to the September 2017 report of Equifax Data Leak, the customer information of over 150 million customers was stolen. The immediate solution to this problem is the implementation of Public Key Cryptography, which aims to quickly block off the hacker’s attack in one go. With this, the Lightning Network made by Atomic Swaps aims to be implemented soon so that Bitcoin can be integrated into other cryptocurrencies and blockchain networks.
So, what made Bitcoin Cash continue moving even after the Bitcoin hard fork in August 2017? It is mostly because of being impatient and being really greed a trait that people can’t really control.
Ripple and Mastercard / Visa Integration
So, now that you know more about Bitcoin Cash, let’s talk more about Ripple and how the cryptocurrency has the ability to be integrated into credit card company’s payment networks (such as Visa or Mastercard). Let’s also find out how this can affect the overall price action of the cryptocurrency as well. We already know that Matercard doesn’t seem to partner-up but I guess this is not the end of the story.
We can see that Ripple does have much lower fees than Bitcoin in the Bitcoin network and even in the Visa’s transaction fees at the moment. Of course, Bitcoin’s transaction fees still beat Visa’s processing fees too. Ripple, on the other hand, has a team of finance experts and tech professionals who are aiming to make Ripple a part of the entire credit card processing. The goal is to integrate Ripple in credit card payments or maybe even grab the whole market share of payment processing, beating even Visa and Mastercard. Of course, it’ll be really cool to see what happens to the price action of Ripple.
Never forget: When companies stated to adapt Ripple, this doesn’t mean, they use Ripples tokenization, they might just use the Ripple technology, so don’t order your Lambo immediately after reading about a great new Ripple partnership. 😉
Ripple “What If” Projections
First of all, let’s take a look at CoinMarketCap’s Ripple profile. There are 38,739,144,847 Ripples in the network being circulated among different individuals. Also, there is a max supply of 100 billion Ripple (XRP), which are all held by leaders and an XRP fund to control the growth and volume of the cryptocurrency. If this fact is considered to be either good or bad, you have to decide on your own. We know the decentralized idea doesn’t seem to match with the idea behind Ripple!
Let’s talk about Visa first. We know that Visa owns a really big market share in the financial market. So, what’ll happen if we put Ripple in the picture? To understand it more, let’s take a look at some of the statistical figures on the potential situations and projections of Ripple.
Now, let’s match that to let’s say, Visa. Visa currently has approximately $8.900.000.000.000 worth of total payment process volume.
Just like Visa, Ripple is also for payment processing. You have to keep in mind that in a country that converts currency into XRP, Visa is not the only institution that’ll make use of XRP. In fact, we can expect big financial guys like JP Morgan or Goldman Sachs to start using Ripple for payment processing as well.
Being a digital asset, financial institutions do regard Ripple as an investment medium for some of their clients. Of course, it’s hard to say how much XRP will be transacted by these big guys, but we can always make guess.
Let’s say that XRP is able to get all the $8.900.000.000.000 volume of Visa, then we divide 8.900.000.000.000 by the current volume of XRP which is 38.739.144.847. This will result in price of about $230 per XRP.
This is the answer we’ll get ideally if Ripple snags the entire Visa transaction volume, which may most likely not be possible. Aside from Visa though, we also have to take note of the other companies Ripple can be integrated into. Let’s take Mastercard as the next example.
Although there isn’t really a concrete figure to how much volume Mastercard garners in their transactions, a 2013 report estimates it to be somewhere at $3.5 trillion worth, so we can use that for a hypothetical computation.
Using the same computation as we did for Visa, we’ll divide $3.500.000.000.000 by 38,739,144,847 XRP. This results in about 90 USD per XRP.
Once again, this is a “WHA IF” Ripple is able to capture all Mastercard’s volume, which is again, quite unlikely. Also, if by some miracle Ripple gets both Mastercard and Visa’s combined volumes, then it’ll be $12.400.000.000.000 by 38.739.144.847 XRP. This results in about 320 per XRP.
Let’s go even bolder and check out the Assets Under Management market held by investment banks. As stated above, we can consider Ripple as an AUM by financial institutions. According to Assets Under Management 2020: A Brave New World report, AUM’s have an expected growth of $101 trillion come 2020 with it at $71 trillion right now.
Let’s say that one of the investment mediums in an AUM is Ripple. This means that 1% (generally, AUM’s follow a 5% diversification rule) of $71 trillion goes to Ripple. That’ll be $710 billion going to Ripple. Using the same formula as both Mastercard and Visa, we divide $710.000.000.000 by 38.739.144.847 XRP to get about 18 USD per XRP.
There are also Ripple alternatives and upcoming interesting projects such as Wanchain which is definately woth to keep an eye on so don’t take Ripple as the godfather of cheap transaction and the coin with the best use case. These are some pretty bold forecasts and shouldn’t be taken as actual investment advice since this gives an ideal situation and we all know things don’t go ideally like this. No one will ever know the future of the markets; hence, we won’t know how far Ripple will go in the next few years. However, we can definitely see from the facts that we’ve discussed in this article that Ripple has huge potential for growth, even if you like the idea behind it or not.
Also consider the fact, the most of the current XRP supply is hold by its founders which is another argument for the crypto community that Ripple is far away from the ideal blockchain concept.
Let me know what you think in the comment section below or drop me some lines if you have any question.