On Friday Ripple tweeted a link to their site ripple.com/insights to an article written by Rick Cook of RBS (Royal Bank of Scotland) titled “The Case for More Decentralization”
Over the past few weeks, Ripple has been under fire from many die-hard cryptocurrency enthusiasts who have been attacking the company as well as holders of their cryptocurrency, XRP, because it is seen as unsafe due to the centralization of their servers and nodes. This has caused many to consider Ripple as a bad bet.
In October 2017 however, Ripple did release an update to their decentralization strategy which confirms that the company does intend on completely decentralizing their XRP Ledger (previously called the Ripple Consensus Ledger) once they deem it safe to do so.
In their latest insight Ripple seems to be reminding the public that they do agree with the fundamentals of both the (perhaps fictional) Satoshi Nakamoto, as well as the majority of the cryptocurrency-supporting community by publishing a pro-decentralization article.
A question posted on Quora: “If a large amount of banks were to adopt xRapid and started using XRP, how would that impact the token’s value?” was answered by David Schwartz, Ripples Chief Cryptographer in late January, mentioning Uber, AirBNB, Seagate and Amazon by name as potential use cases for xRapid, which uses XRP for fast liquidity.
There has been much speculation on a Ripple partnership with these companies which started mid-December and continued into January. David may be using these whispers to his advantage to perhaps increase the speculation (and price) around Ripple, or he may be hinting at some massive partnerships. Just two days ago Santander announced that their Ripple pilot was a success and that they plan on releasing their money transfer application in Q1.
While those partnerships are interesting in terms of benefits to the consumer and the service provider, the question was about XRP’s value.
As explained here, Ripple’s xRapid requires XRP to transfer value between two parties. If xRapid is broadly adopted, this means that more XRP will enter the market from Ripple’s reserve.
David speculates that if xRapid is massively adopted, it could create a significant demand for XRP. He then goes on to mention the example use cases of Uber, AirBNB, Amazon, and Seagate. He points out that instead of these businesses having to hold funds in multiple places globally, they would be able to purchase XRP and hold it all in one place and being near instantly being able to receive more from customers as well as being able to send it to suppliers etc. There would also be less of a need to hold massive XRP stockpiles by a business as they would be able to fairly easily and cheaply buy more.
He then says that this could possibly lead to a Jevons paradox. A Jevons paradox is where needing less of something to accomplish a result causes people to want more of that item. He uses the following example of coal-burning power plants:
This paradox and its effects seem to be incredibly prevalent in the crypto-space, with countless speculators and investors adopting the stance of buying as much of a cryptocurrency as they can once they either see their use benefits (Monero, for example) or if it performs well in terms of its value. If businesses chose to hold on to large amounts of XRP, or dollar-cost averaged their purchases and bought it up in stages, the price of XRP would significantly increase. This would result in businesses needing even less XRP to perform its functions for that organization and make holding the currency more attractive.
These (possible) hints at xRapid adoption may or may not come to fruition, in the crypto space there are many cases of “shilling” to increase the price of an asset, and since we don’t personally know David or his motives, we can’t predict whether he is giving us a hint, trying to increase XRP’s value for his own needs, or trying to grab the attention of those companies in order to make it a reality, so don’t consider the information fact, rather use it to decide if his ideas for use cases have the potential to become a reality, and invest within your means.
Tiaan Wolmarans is a cryptocurrency investor and trader, airplane pilot, musician, and writer.
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