Ripple is a name that most people even with little exposure to cryptocurrency space are familiar with. It is currently ranked 3 in terms of market capitalization and is trading at $0.45 at the time of this writing with a high of $3.82 on January 4, 2018.
There has always been a lot of confusion about using the words “Ripple” and “XRP” interchangeably and why the insane number of partnerships Ripple is signing doesn’t translate to increase in the price of XRP. To understand this further, it’s important to know the relationship between “Ripple” and “XRP” and the place “XRP” hold in Ripple’s two important products “xCurrent” and “xRapid”. Let me explain this a little bit further,
Ripple is a Fintech company the offers global money transfer services using blockchain technology. It maintains an enterprise blockchain called RippleNet which connects banks, payment providers, digital asset exchanges and corporates to provide a frictionless experience when send money globally.
XRP is the native token used by Ripple to achieve instant global money transfers at low cost.
xCurrent and xRapid are the products sold by Ripple to it’s clients to achieve faster money tranfers.
Now, Why does the performance of “Ripple” doesn’t reflect the performance of “XRP”? (I mean when the company is growing, it native currency should also rise, right? No)
The above theory applies to a company’s shares, but tokens work in a different way. Majority of the partnerships that Ripple formed until now are for its product called xCurrent.
xCurrent in short is basically a real-time messaging platform that let’s the two parties of the transaction to co-ordinate with each other just like how SWIFT works. The actual settlement can happen in any currency both fiat or cryptocurrency.
xRapid in contrast primary uses XRP to transfer money globally in a fast and efficient way. It is a low-cost liquidity solution where in the fiat is converted into XRP, transferred to its destination and then reconverted back to fiat. Here is a small snippet from Ripples official website,
In conclusion, the price of XRP largely depends on how many companies sign up of Ripples xRapid product rather than xCurrent.
Here’s why I am bullish about XRP long term,
>> Ripple is revolutionizing the space that stayed the same for a very long time resulting in higher costs and longer transaction times. Also, it is working with the banks rather than competing with them for money transfers.
>> The company has over 100+ customers with 75+ customers deploying it commercially.
You might ask me here, didn’t you say that most of the customers are using xCurrent and it doesn’t increase the price of XRP?
Yes, I said that. But it is also true that acquiring customers is hard. Making them try a different product is not, especially when they are already using one.
>> Companies started showing interest in xRapid
Testing:
- Moneygram
- Currencies direct
- Mercury FX
- IDT
- Western Union
- Cambridge global payments
- Viamericas
Using:
- SBI virtual currencies
- Cuallix
- Zip Remit
Source https://bcfocus.com/news/ripples-xrapid-powering-payments-with-xrp-for-ten-companies/17160/
>> Foreign Exchange Market - There is a chance for Ripple to tap into Japanese FOREX market through it’s partnership with SBI Group.
“The Forex market is one of the biggest markets in the world, with the global market transferring upwards of $5 trillion every day. The part of the market that deals in Japanese Yen [JPY] has a share of about 21%, which translates to 950,000 billion every day. It is the third biggest currency being traded in the market, after USD and EUR.
XRP capturing 1% of the Japanese Forex market would result in a $10 billion volume made in trades every day, which represents one small piece, of one corridor, of one use case. Comparing this against the circulating supply of the token will cause a significant price increase.”
Source https://ambcrypto.com/ripples-japanese-dreams-what-is-going-on-with-their-sbi-partnership/
Although, it was speculative, there is a possibility of that happening.
>> Ripple counts some of the most well know companies as it’s investors.
Yes, it’s true that there is a lot of friction going on these days with some calling Ripple/XRP a security and Ripple being more centralized than its peers in blockchain space. But it’s a discussion for another day.