Been a LONG time since I've posted here...feels good to be back.
I’ll start this post off by saying that although I have been following Ripple/XRP for years, and invested in XRP years ago, over the last year I have stopped following as closely. I feel like a noob sometimes. Between moving to a new city, a new job, family things, etc., I haven’t been able to follow as closely as I’d like. I see the announcements, see the price movements, etc. but don’t see everything, so if I mention anything in here that has already been said or spoken about...sorry.
But Bob Way’s posts from the last week or so have driven me down a deep rabbit hole and I love it. I’m going to reference some of Bob Way’s posts in here and I really don’t feel like going through the threads to find his specific posts and linking them. Sorry. I’m lazy right now. If you want to go find them, look in the ‘Hi! I’m Bob’, “Answer: wen moon?’ and ‘Answer: about the patent, Let’s talk’ threads. Also, Bob (and anyone else), if in this post I’m misinterpreting anything, if it’s plain stupid and makes no sense, if it’s hype, just say it/report this post. If it’s so over the top, I’ll take it down.
I wanted to take some time to discuss the price of XRP. Obviously, all of crypto has hated the price movement of every coin since the end of 2017, but XRP is unique. Let’s discuss.
It is always been talked about but the main thing to remember is this: utility. XRP is not like other coins. There is actual utility and real-world use of XRP. Average people like ourselves use XRP. Payment providers use XRP. Financial institutions use XRP. And this real use case in the real world plays a significant role in the price of XRP.
In order for XRP to become the world’s bridge asset, there have to be many players in the ecosystem. Some of the biggest will be market makers. Remember this: market makers do not care about price. They make money off of the spread and the narrower the spread, the more money they make. You know what market makers hate? Volatility. Volatility kills their spread aka they do not make as much money. So when you see the price of XRP staying somewhat stagnant, that is GOOD. Market makers are at work and they’re making money, they’re happy. Obviously, a higher price of XRP is good in the long run, but market makers play a SIGNIFICANT role in the XRP ecosystem and if they can make money while the price gradually increases, everyone wins.
Now, I’m sure everyone is itching for XRP to pump (myself included), especially after seeing other alts pump recently and the overall bullish sentiment of the market. But if it doesn’t pump, we should be VERY happy about that. Why? It’s safe to assume that when a coin pumps, there’s probably not a lot of liquidity. Order books are thin and there can be massive moves up or down. For other alts, that’s fine - most don’t have real use cases. But typically what follows a pump is a dump. And it makes sense, people want to see profits and they’ll unload their coins.
But for XRP, we might not want that. Why? Again: UTILITY. XRP has a real use case and actual customers - we do not want the price to be pumping and dumping. When XRP stays somewhat constant, with good volume, that’s VERY good. That means that the order books are deep (more liquidity) and that over time institutions can make larger trades without moving the price way up or way down. Customers using XRP want liquidity. They NEED liquidity in the market to use XRP.
We’re also itching to see xRapid move the price. However, Bob Way said it himself the other day - xRapid probably isn’t going to move the price of XRP. You’re buying and selling the same amount in a short amount of time. What xRapid will do, however, is show institutions the benefits of XRP without having to hold it. And for some institutions, xRapid is perfect for them. However, some will see the benefits of using XRP and won’t want to pay additional fees for using xRapid, so they’ll want to hold XRP themselves. Bob also mentioned that over time this could put upward pressure on the price, with institutions realizing how liquid XRP is and wanting to hold it.
So, what does xRapid do (for XRP, we know the savings it provides for customers)? It provides liquidity. It deepens the order books. And yes, it may help to increase the price due to demand. You know what else it does? Brings market makers in the game. Why are market makers important? They’re going to play a MASSIVE role in helping XRP become the world’s bridge currency.
Now, this is the part where my tinfoil hat really has been put on (more so than above), so absolutely be skeptical of EVERYTHING I say.
I took time this past week to read through the issued patents that Bob Way has. And then I read through them again. And again. And again. They’re VERY hard to understand and I definitely do not truly understand everything that is in them, but some parts jump out. I also want to mention that Bob Way posted that one of these patents (Stefan’s original idea, but Bob and Ripple have been issued the patent), over time, puts upward pressure on the price of XRP and could help force XRP to become the world’s bridge currency.
One of the patents (resource path monitoring) was issued in July 2018 and seems to discuss the distribution of any resource (corn, XRP, water, etc.). If you read through it, there are a few paragraphs that seem to describe the escrow process that Ripple has with XRP...which is intriguing that the patent came out just a few months before escrow actually happened (the escrow announcement was also 2 months before this patent was issued).
THIS NEXT PARAGRAPH WILL SOUND CONFUSING BUT I WILL TRY TO BREAK IT DOWN AFTER. BEAR WITH ME:
There is a lot of wording in the patent, but one thing that jumps out is that it discusses a reservoir resource pool which sounds exactly like Ripple’s stash of XRP. It discusses how the intermediary resource in this pool (in our case, XRP) can be distributed from the reservoir resource pool to other resource pools (accounts) on the same resource network (in our case, the XRP ledger). It also discusses that a computer-implemented method can monitor various resource paths on the resource network over a certain amount of time, called the monitoring period, and that the reservoir pool can then send the intermediary asset to various resource pools at the end of the monitoring period during a time called the distribution period. This computer monitoring system can monitor volumes/costs on various resource paths and during each distribution period can distribute the intermediary resource based on the volume/costs of each resource path. If during one monitoring period there is a resource path that uses a lot of the intermediary asset, the reservoir pool has the ability to send more of the intermediary asset to that resource pool. If during one monitoring period the intermediary asset is not used that much in a certain resource path, the reservoir pool has the ability to send less of the intermediary asset to that resource pool.
Ok...let’s try to decipher this.
To me, this sounds EXACTLY like Ripple’s escrow process. What I took from the patent is that during a certain period of time (monitoring period) a computer system has the ability to monitor the movement of all funds over the XRP ledger. Basically, they can track all of the different payment paths over the XRP ledger and can see the volumes/costs associated with each ‘resource path’, which could be a fiat-fiat path, XRP-fiat path, etc.
I would guess that the monitoring period is a month...when Ripple’s XRP is locked in escrow. At the end of each month, Ripple distributes some of their XRP to various accounts to help build the ecosystem as they say. They distribute it based on the volumes/costs of the previous month. Who are they distributing it to? My guess - market makers. This could be crypto exchanges or other institutions (think a trading desk at a bank) and they distribute the XRP in markets/payment paths where they believe it will help. They’re helping to make XRP the bridge currency in those markets.
Now, let’s connect the dots on why this is important. There is a patent that they have that allows them to distribute XRP based on calculations of the XRP ledger. They are able to distribute XRP to market makers (and others) which helps to bring deep liquidity to XRP markets. Over time as RN grows, this will help force XRP to be the world’s bridge currency
Now I’m a little tipsy off of the red vino after writing this, but I think this relates to what xPool could be. This came to me late last night, and I didn’t want to share it, but why not.
Everybody thinks xPool will be one big pool of XRP that people can draw off of...how is that possible? Who controls the pool? Who controls the private keys to the pool? Again, I’m tipsy, and not a technical genius, so if something like this is possible, please let me know.
However, I don’t think it’s one big pool at all, I think it will be related to the resource pools discussed in Bob’s patents and to the pathfinding feature that will eventually bring together all of RN.
Now, this is also where I want people to correct me if I’m wrong because I haven’t followed the advancements of xCurrent/RN over the last year. The end goal of RippleNet is for everyone to be connected (aka multihop). As on now, xCurrent is used as a messaging system and leverages Nostro/Vostro accounts and we all know what xRapid does.
BUT as RN grows, it will all be connected, and everyone will have a resource pool. A resource pool may not be this complicated idea. We know Bittrex is an xRapid partner - they have a ‘resource pool’. It’s every resource that they hold.
Based on what I’ve read about the other Bob Way patent, xPool could the next software integration that connects all of RN (much like the pathfinding feature they have listed on page 17 of this page - https://ripple.com/files/ripple_solutions_overview.pdf). That patent (resource transfer setup and verification) sounds VERY MUCH like what everyone thinks the Interledger Protocol will be...and that patent was just given in January of 2019. It’s also interesting that Bob Way mentioned xCurrent uses ILP 1.0...I’m not sure exactly what 1.0 entails but is 1.0 just atomic payments when you can leverage Nostro/Vostro accounts? Could the latest version that just got patented be the ILP we all think it is in terms of connectors moving various assets (fiat/crypto/etc) at once over multiple payment paths aka multihop? Bob said the current version ILP is 4.0...customers were also supposedly beginning the transition to xCurrent 4.0 last fall...a couple of months before the patent was formally issued. Very interesting.
Now - that’s all for me. Please let me know if this is all stupid and I should take it down. I’m going to enjoy the rest of my vino but I wanted to share this with you all. I’m sure it took various turns but, hopefully, it makes sense and encourages people to go dig deep in the patents/other articles and connect the dots.