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Analysis: 2018, the year of Ripple

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January is an interesting month for crypto historically.

Yes, the second week of January is usually the most painful week throughout the entire year for price levels.  23 24  Different analysts attribute this market behavior to different factors, but one thing is for certain; no matter which crypto you are holding, you are probably seeing red numbers.

However, the month of January also provides us with an opportunity to benchmark statistics and metrics associated with each of our crypto picks, and XRP is no different.  In early October, I wrote about some of the metrics and numbers associated with XRP and Ripple.  It was one of a number of pieces I wrote before the SWELL conference, as Brad_Q_Athe entire banking industry was gearing up to learn about Ripple technology.

I’ll cover a similar set of statistics and numbers in this post, with the goal of base-lining progress for XRP and Ripple.

XRP Performance

Where should we start?  It’s important for XRP investors and veterans to keep in mind that a lot of new researchers and investors are looking into XRP.  This means that they will be reviewing the basics as well as some of the advanced concepts.  For this group, it’s wise for our “by the numbers” benchmark to stop and review some of the numbers that set XRP apart from all crypto competitors.

The digital asset that Ripple created in 2012 continues to exceed the technical performance of its competitors in the most important categories for a crypto-currency.  These performance metrics can scale to match the speeds of centralized payment databases such as VISA or PayPal.

  • Settlement Speed (Full confirmation): 3.54 Seconds 1
  • Scalability: 1,500 TPS On-ledger / 70,000 + TPS Off-ledger 2

XRP Liquidity Statistics

In late 2017 and just recently in early January 2018, there has been an explosion in XRP popularity as new crypto investors discover the crypto-currency with unmatched performance metrics.  Because of this surge in demand, many new exchanges worldwide are now offering XRP as an offering beside the traditional choice of Bitcoin.

This demand is growing, and the daily volume and liquidity is now measured in the billions each day.

  • Number of Exchanges: 46 3
  • 30-Day Volume: $74.6 Billion (~ $2.5 billion per day) 4
  • Ranking by Market Capitalization: 3rd 5

XRP Ledger Fees and Costs

XRP was created specifically with global scalability in mind.

The XRP Ledger performs under maximum stress; it can support parabolic growth in the number of transactions.  To pay for the network and its speed and stability, the XRP digital asset provides several anti-spam functions in addition to its use as a bridge asset.

XRP contains code that will automatically adjust transaction fees during periods of high usage to discourage DDOS or transaction spamming.  It also contains a required reserve amount for establishing new wallets.

transaction-cost

  • Cost to activate a wallet (“reserve” amount): 20 XRP 6
  • Cost to add a trust line to a wallet: 5 XRP 6
  • Cost to open an order: 5 XRP 6
  • Minimum Cost Per Transactions: 0.00001 XRP (10 drops) 7
  • Latest Network Load-Adjusted Cost: 0.0008078 XRP (1,000 drops) 8

Bank Adoption Statistics

One of the topics that is hotly debated by XRP believers and naysayers is how much XRP demand will be driven by bank adoption and utility.  In the beginning, there were many skeptics within the crypto community, as no crypto-currency had yet been adopted for use by traditional financial companies and banks.regulations

However, times are changing, and with the cost savings that XRP provides, more and more banks and customers are considering adding xRapid to their Ripple tool set. (Ripple’s XRP offering is known as xRapid)

  • Number of Banking Customers: 100+ 9
  • Number of customers deploying Ripple technology commercially: 75+ 9
  • Number of (officially announced) customers using xRapid: 2 10 11

Bank Savings Estimates Using XRP

Ripple studies banks.

They’ve analyzed all of the cost components of processing international payments across borders.  They are familiar with the legacy technology, the international standards for data transmission, and the various techniques that correspondence banks use to move value across the globe on a daily basis.

Using this knowledge, they created a suite of software to achieve two things:

  • Lower the transaction cost to near-zero
  • Settle entire transaction in real-time

Ripple’s software is progressive in nature; they do not pressure banks to use a crypto-currency.  In fact, banks can achieve the first tier of cost savings without using XRP at all.  Here’s how the estimated cost savings work for banks using Ripple technology: 12 13

  • 33 % Cost Savings based on minimization of settlement delays, without using XRP
  • 42 % Cost Savings Using XRP assuming high volatility
  • 60 % Cost Savings Using XRP assuming low volatility

For the first tier, think “xCurrent,” Ripple’s ILP-based solution.  For the second and third tier of savings, banks will need to use “xRapid” which uses XRP for liquidity.

XRP Wallet Statistics

When we last took a snapshot of XRP wallets in October before the SWELL conference, there was approximately 500,000 funded wallets in existence.wallet_image

Ripple’s international banking conference, Central Bank Summit, and subsequent customer announcements have resulted in a dramatic surge of investor interest in XRP as a speculative investment.  Because of this, the number of funded wallets has grown now to over one million.

Keep in mind that for XRP, each wallet also acts as a spam prevention mechanism, in that it costs a certain amount of XRP just to activate a wallet on the ledger.  This is known as a “reserve” amount and it cannot be withdrawn by the user.  The concept is similar to a “minimum account balance” in banking.  This factor means that the intentionality of each wallet is clearly higher than that on other networks – the possibility of multiple wallets still exists, but the likelihood decreases if you require a user to pay for one.

Here are the latest numbers:

  • Number of XRP Wallets: 1,044,512 14
  • Percent of XRP Wallets holding more than 100,000 XRP: 1%  (i.e., you’ll need ~ 100K XRP to be in the XRP “1% club”) 15

Ripple (Company) Numbers

I’ve emphasized how different XRP is before.  Probably one of the biggest reasons that I invest in XRP is because I’m impressed with the team behind it.

In crypto, as new investors do their due diligence on investments before making a purchase, they will encounter many different coins and crypto projects with nothing but a whitepaper and one or two names.  Right now, blockchain technology is going through a similar phase of growth to the Internet in the late nineties, where almost any business with a “dot com” behind it was rewarded with spectacular investment dollars.

The situations came to a head in mid-2017, with the US SEC, China, and now even South Korea issuing warnings and restrictions on ICOs and crypto exchanges.  It’s become very apparent that many new projects have sprung up for the wrong reasons – to cash in on the easy money.

Ripple is different.

From the start, Ripple was (and continues to be) one of the Silicon Valley stars in blockchain technology.  It is a solid US-based business that was established in 2012, and it has some of the most widely-respected names as investors.  Ripple has methodically built its reputation based on hard work, listening to customers, and responding to the needs of the banking industry.

XRP’s use case is real, and is based on solving a real-world problem for international transfers of value.  Its goal is to streamline cross-border payments, and Ripple is one of the foremost companies in the world at addressing this problem.  Indeed, there is currently only one other organization that is widely known as an alternative to SWIFT; Ripple.

Here are some key numbers associated with Ripple:

  • Years in Operation: 5+ 16
  • Number of Employees: 150+ 17
  • Number of Engineers / Architects / Developers: 90+ 18
  • Number of Ripple Offices: 7 19
  • Number of Company Board Members: 8 20

Behind the Numbers

While numbers can provide a quick gut-check for many crypto investors, one of the biggest selling points for me and other XRP fans is the team behind Ripple, the small start-up that initially created XRP.  Ripple started out as a revolutionary idea from its inception, and evolved into the crypto network that will eventually take the place of Bitcoin.

Each time you look at a different aspect of XRP, think about the level of foresight necessary to plan for global scalability, while not relying on wasteful mining to validate transactions.  While all of Ripple’s code is open-source, it chose to patent its consensus protocol, because the team knew that they’d created something revolutionary.

It would be similar to Google patenting part of its search algorithm.

The company has the technology, but even more importantly, it has the team that created that technology.  Chris Larsen?  David Schwartz? These two will eventually be referred to in textbooks on crypto-currency and cryptography.  What about Stefan Thomas and Evan Schwartz?  The creators of ILP could probably lecture on the Interledger Protocol full-time.21 Brad Garlinghouse, Ripple’s no-nonsense CEO, is the famous author of the “Peanut Butter Manifesto.”22 The list goes on, and this team has been joined by other legends in the crypto and ForEx industry such as Nik Bougalis, Warren Paul Anderson and Miguel Vias.  New team members that are known as crypto celebrities are joining almost every week  –  the list is too long to print here.

My point is this; while statistics and numbers don’t lie, to truly understand the potential of XRP, you have to look beyond the current state of the network, no matter how impressive it is.  XRP is on its way to number one.  For those of us wise enough to understand, it provides an unassailable opportunity to own XRP – and thus secure our share of the most transformative technology since the Internet. ripple-symbol3

Resources:

  1. https://ripple.com/xrp/market-performance/
  2. https://ripple.com/xrp/
  3. https://coinmarketcap.com/exchanges/volume/24-hour/all/ (All unique exchanges here plus Cointal)
  4. https://ripple.com/xrp/market-performance/
  5. https://coinmarketcap.com/ (snapshot on 1-14-2018)
  6. https://support.gatehub.net/hc/en-us/articles/115003269345-What-is-XRP-reserve-
  7. https://ripple.com/build/transaction-cost/
  8. https://ripple.com/xrp/market-performance/
  9. https://ripple.com/
  10. https://www.financemagnates.com/cryptocurrency/news/cuallix-uses-ripple-cross-border-payments-u-s-mexico/
  11. http://fortune.com/2018/01/11/ripple-moneygram-xrp-cryptocurrency-bank-transfers/
  12. https://ripple.com/files/xrp_cost_model_paper.pdf
  13. https://www.pymnts.com/news/b2b-payments/2016/a-closer-look-at-ripples-money-saving-claims/
  14. https://xrpcharts.ripple.com/#/accounts (Snapshot on 1-14-2018 @ 4:37 pm CST)
  15. https://twitter.com/TBCrypto/status/947894755714793478
  16. https://en.wikipedia.org/wiki/Ripple_(company)
  17. https://en.wikipedia.org/wiki/Ripple_(company)
  18. https://youtu.be/w4jq4frE5v4 (slide #4)
  19. https://ripple.com/company/
  20. https://ripple.com/company/board-of-directors/
  21. https://interledger.org/about.html
  22. http://www.businessinsider.com/what-i-got-wrong-in-the-peanut-butter-manifesto-2013-1
  23. https://www.tradingview.com/chart/BTCUSD/cg3dQNsg-Bitcoin-We-re-seeing-Cycles-Develop-Jan-12th-2018-LOW/
  24. https://thebitcoin.pub/t/bitcoin-to-crash-between-4th-and-15th-of-january-2018/14897

Analysis by Hodor (hodor7777) considered one of  the best analysts on Ripple.

 

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