Bear with me...this will be a long, but I think very interesting, post. I read the article that came out today from Google talking about Google Pay and how it's already available on Airbnb, so I went down a rabbit hole for about 8 hours and dug a hole to China. Literally. And it basically was facts that I've read before, but never connected them all together. Take a look:
The craziest thing to me is how everything is connected in terms of companies, investors, you name it. And I should start by saying that I'm assuming the investors I mention (big name investors) probably have some power behind them and obviously they want a great return on their investment.
So we start with Founder's Fund. Founder's Fund (owned by Peter Thiel) is an early investor in Ripple, and also Airbnb. Founder's Fund and CapitalG (Google) are early investors in Lyft. Lyft uses Cross River Bank to pay their driver's, and Cross River Bank has implemented Ripple's software. Lyft uses Stripe as their payment processor, and CapitalG and Founder's Fund are early investors in Stripe, which also had an early investment from American Express Business Travel - this was acquired by Standard Chartered Bank who also invested in Ripple. So right there you can see how using Ripple links a ton of people, and has the potential to save companies money, which makes the big investors in those companies happy.
EDIT: Cross River payment solutions currently integrate with and are used by Stripe. In September, Cross River announced its partnership with Earthport, and Earthport announced its gateway partnership with Ripple in 2015. Earthport also has Stripe as a client...going to come back to this in the morning, there's a lot there.
Then we go a little deeper. A vc firm, 500 Startups, founded by ex Google and PayPal employees invested in WePay, which is considered a market leader among payment providers for crowdfunding site and small business tools. WePay already partnered with Apple Pay and Android Pay (now Google Play), and they were acquired by JP Morgan at the end of 2017. At the end of 2017 there were also 15 JP Morgan executives in Ripple's office one day.
Google Ventures is an early investor in Ripple and Uber. dLocal is a payment provider who integrated Ripple's software in the second half of 2017, and its customers include Uber, AliPay, WeChat Pay, and Union Pay, which are China's 3 major digital payment providers and they're ******* huge.
AliPay is part of Alibaba, Union Pay has a partnership with PayPal, and WeChat is part of Tencent Holdings, which is the world's biggest investment corporation. Tencent also has Tenpay, a payment system similar to PayPal. It was reported that Tencent was working closely with China's Central Bank in 2017 to develop a central payments clearing platform for online payments. In August 2017, key leaders from China's Central Bank met with Ripple at their HQ. AliPay and WeChat are the payment providers for DiDi Chuxing, which is bigger than Uber in China - in fact Uber sold their China operations to Didi for a minority stake in Didi. AliPay is also accepted by Uber and Airbnb. Remember - Alipay uses dLocal which integrated Ripple's software in 2017.
EDIT: China's central bank announced in August 2017 that all banks and payment companies must connect their systems with the Online Settlement Platform for Non-Bank Payment Institutions. All payment transactions handled by third-party providers will go through the new clearing platform beginning in June 2018. TenPay and AliPay each hold a 10% stake in the clearing platform. From above, Ripple has worked with China's central bank recently (fall 2017).
EDIT: Referring to the above ^^, I would not be surprised in the least bit if Ripple came out with an announcement and said they're partnering with China. Just China as a whole is a partner. It already looks like it could happen the way things are connected.
Alibaba and Union Pay also invested in Ucar, a rival to Didi.
Tencent invested in Uber and Lyft, Alibaba and Didi invested in Lyft, and Softbank Group invested in Uber. Softbank Group also has a 30% stake in Alibaba. So again, because of the savings, if Ripple is saving these companies money, I would imagine everybody wants Ripple to be used in the companies they've invested in, especially if they are already linked to Ripple in some way.
EDIT: I missed some juicy stuff last night. In 2017 Stripe announced a significant global partnership with AliPay and WeChat Pay. The integration will now enable all Stripe merchants in over 25 countries to make money from Chinese consumers.The partnerships directly connects China's growing cash-less consumer base to hundreds of thousands of Stripe-powered businesses and merchants all over the world. Remember, Lyft uses Stripe, and Founder's Fund/CapitalG/Standard Chartered/Andreessen Horowitz are investors in Stripe, Horowitz in Ripple as well.
EDIT: Let's dig deeper into Alibaba, shall we? In November 2017, they acquired a 36% stake in Sun Art Retail Group, a Hong Kong listed business that is the largest operator of supermarkets and hypermarkets in China. Alibaba believes it can use the colossal amounts of data it picks up through its e-commerce and payment services to improve the consumer experience in-store, while also leveraging AliPay. The Auchan Group also has a 36% stake in Sun Art Retail Group. The Auchan Group is a French international retail group with a ton of supermarkets and hypermarkets. In 2017 the Auchan Group started operating BingoBox in China, which is China's version of Amazon Go. Customers at BingoBox pay through AliPay or WeChat Pay. GGV Capital is an investor in BingoBox, and a very early investor in Alibaba (2004). Side note, but Source Code Capital is an investor in BingoBox and Kakao - Kakao runs Korea's dominant messaging service and has a Fintech project called Kakao Pay which Ant Financial invested in. The partnership will leverage Ant Financial's strengths in digital finance services.
EDIT: Tomorrow I'll try to dive into AliPay and WeChat Pay and just how connected they are to the world, because it's huge.
And now onto India. Alibaba and Ant Financial (affiliate of Alibaba, most valuable fintech company in the world, and operates AliPay) have a 62% holding in Paytm. They also have a majority share in the parent company, One97 Communications. Paytm is trying to become the Alibaba of India. They have Paytm Mall, which is a clone of TMall, online retail operated in China by Alibaba. They also have Paytm wallets - could they follow in the footsteps of Alipay? Alibaba and Ant Financial are literally copying what they did with Alibaba but in India. Softbank also has a 20% stake in Paytm...remember they have a 30% stake in Alibaba. You can also use Paytm to pay for Uber...It's all connected. Patym is becoming Alibaba's vehicle for their ecommerce play in India.
Alibaba has a laser focus on payments because it sees payments as a key strategic battle to winning ecommerce. Up until a couple of days ago they were going to acquire MoneyGram, a top 5 global money transfer firms, but that was blocked by the US government. Remember, Ripple stated 3 of the top 5 global money transfer firms are on board with Ripple, so this move would have made a lot of sense seeing as Alibaba is already connected with Ripple. Alibaba said they're still going to work with MoneyGram even though they can't acquire them.
EDIT: Because why not do some more research. Alibaba has an 83% holding in the ecommerce firm Lazada. As of summer 2017, Lazada serves in six countries in Southeast Asia, and while it is primarily focused on online ecommerce, they did acquire Redmart to get into egroceries. Sounds very familiar to the Alibaba/Paytm relationship in India. The really interesting part of this is that Ant Financial (AliPay) merged with Lazada's helloPay platform to bolster payments processing capabilities. It goes even deeper. Earlier in 2017 Lazada announced an alliance with Netflix and Uber on a membership program called LiveUp. Subscribers get a range of deals and services across its platforms, Alibaba's platforms, as well as discounts on Uber rides and a free six-month subscription to Netflix. LiveUp started only in Singapore, but plans to expand throughout the Southeast Asia region. The alliance also helps Netflix find footing in Southeast Asia.
Also in India - Flipkart has big investments from Tencen/Softbank/Axis Bank. Axis Bank started using Ripple's software in 2017, Tencen's WeChat Pay runs on dLocal which uses Ripple's software, and Softbank obviously has a huge stake in Alibaba, which has AliPay running on dLocal as well.
And then for ***** and gigs, Bezos has personally invested in Uber and Airbnb. Amazon has Instacart through their acquisition of Whole Foods, and Andreessen Horowitz is an investor in Instacart...and Ripple. If we want to dig a little deeper, Sequoia Capital, which may just be invested in every company ever, has invested in Airbnb, Google, Instacart, PayPal, Stripe, and Yahoo. If we really want to stretch it, the President of Sequoia Capital's wife worked at Yahoo at the same time Brad was an SVP at Yahoo...which happened to be the same time Yahoo invested in Alibaba.
And this honestly might just be the tip of the iceberg, I'm sure there are so many more dots to be connected and a ton that I missed. But, it makes you wonder. If the companies are saving a lot of money through using Ripple's software, and eventually XRP, I can only imagine that the big name investors behind these companies using Ripple could potentially be encouraging their other investments to start using Ripple as well, if they aren't already. Is Alibaba, with their majority ownership, steering Paytm in the Ripple direction?
Welp, my brain hurts. This was a fun project though. Crossing my fingers for an announcement that Alibaba is completely using XRP, and somehow all of these actually are connected because I can't wrap my head around just how massive that would be.
This is a complete misrepresentation of how markets, valuations and price works for all assets. Crypto is no different.
Look at the better understood and accepted market for equities, which is driven by the exact same principles and dynamics of every market in the world including crypto.
Let’s use Apple’s stock as an example. Apple has issued shares many times over the years, both pre IPO, at IPO and post IPO for reasons including employee compensation. The price of each share issued at these different stages has gone up significantly over time, both at the time when they were issued and on the public stock market over the years. Let’s say the first share was valued at $.01 and has a specific market cap that was equivalent to that price times the number of shares.
Today, new shares issued are valued significantly higher based on the market price. This market price is a reflection of how the market, that being those who are buying and selling the stock, value the company Apple. The market cap is calculated as the value of the entire company and each share represents a percentage of ownership of that company.
Whoever purchased shares of Apple at any time in the past, at a much lower price, can buy and sell their shares at the current market price and it is well understood that the reason for this is because they own a percentage of a company that is valued at a certain price. This value is based on the company’s assets, earnings and projected future growth of those earnings.
No one questions whether the millions of people who bought Apple stock in the past can buy or sell their shares at the market price or claims the market cap/valuation of the company is irrelevant.
Just as is the case with XRP and every market traded asset, the market cap of Apple is calculated based on the last price traded times the number of shares or units in circulation. The only difference is that the demand for shares of Apple stock, that being the price buyers will pay, is based on the purchasers belief of what Apple - the company - is worth. Again, assets, earnings, future earnings, etc. Apple’s market cap is a very clear representation of the markets determination of the value/total price of the company. When I say the market’s determination, I am referring to a sort of average based on the many many many people who are making buy/sell orders for Apple.
This is an investor’s viewpoint. The intelligent investor also knows there are those who are miscalculating the value of the company as well as those who are speculating. Speculators are those who are ignoring the fundamentals of a company’s value, namely its assets and earning, and are purchasing based on how they think the price will move based on everything from looking at charts to buying something because they like the brand or are making some prediction that others will pay more in the future for whatever reason. That’s why investors have an opportunity to make money in the long term.
Note, these ideas are not mine. Every investor should read The Intelligent Investor by Benjamin Graham, Warren Buffet’s mentor. This book recommendation is also Warren Buffets, not mine.
XRP, if looked at from a rational investor standpoint, has the same principles of every other market. Ripple, and those invested in XRP, constantly reiterate that XRP has an underlying value due to the demand cross-border payers will have for the asset. Instead of demand being dictated by the value of a company, like the demand for shares of Apple, XRP holders anticipate the demand will be based on the need for XRP for cross-border Payments. All the other market dynamics are exactly the same as those of any other market. I would argue it is the only crypto that can be invested in as a rational investment.
Your statement that the price can go anywhere is correct. There are speculators who pay all sorts of prices for things that have no rational basis in the underlying value of the asset. $1000 is possible, just insanely unlikely. I would argue that bitcoins half a trillion dollar market cap is a prime example of how an asset, with no clear underlying value, could go to crazy prices based on speculation alone. This speculation was what drove the dot-com bubble, as well as every other bubble ever.
Gold, though an actual commodity (ie raw material), is slightly analogous as the price and demand for gold is totally disconnected from a valuation that can be placed on the item itself. That said, the value of all of the gold in the world is $9T.
Theoretically, speculation could drive the price of XRP to $1000. In reality, this would make XRP the world’s largest speculative bubble in the history of the world by a large multiple and the resulting crash would be globally catastrophic. It would also likely create hyperinflation of all other currencies globally if it does reach that point... Thus, unless you are banking on the bitcoin mindset that decentralized currencies will completely displace national currencies, which is the opposite of the principles Ripple is built upon - $1000 is highly unlikely.