I have been following XRP and Ripple for a while now but I have just officially joined this forum. I have learned a great deal from you guys, so thank you!
Maybe this is a dumb question, but when Ripple says it will release 1 billion XRP "each month," is there a fixed timeline? Ripple's website doesn't seem to be clear on that (or I've been unable to find a published timeline, i.e., the exact dates), although they do have a graph describing their expected circulation: https://cdn.ripple.com/wp-content/uploads/2017/05/Screen-Shot-2017-05-16-at-9.39.37-AM.png.
Assuming the exact dates are set (and are public), or alternatively assuming that at least the date range is known / can be anticipated and that the marketplace trusts Ripple to follow through on its promise (since Ripple said that the releases will be in monthly intervals), these are my questions:
(1) Will that 1 billion XRP each month be released on the exchanges or to institutional buyers? If so, has Ripple said anything more specific about the exact plan?
(2) Ripple has the ability to set the price for that 1 billion XRP each month, right? Has Ripple indicated that it will sell that released XRP at the market price?
(3) This question has to do with standard economic theory versus the reality of the XRP marketplace. I assume at least a half of the marketplace comprises investors who've done their due diligence (i.e. those who know about the escrow and can predict the quantity of XRP with reasonable accuracy, among other things), but correct me if this is a bad assumption.
Standard economic theory would predict a fall in price as supply increases. But of course, the case of XRP is different. There's actually a fixed supply of a 100 billion XRP. It's just that the quantity supplied comes in chunks, but we also have reasonable knowledge of this and its timeline. But of course, new buyers also arrive each month, and people who want to space out their buys will compete with the new buyers. Optimistic buyers will not space out their buys, because they want to get it as cheap as possible. Risk-averse buyers will not pay attention to the quantity locked up in escrow; their price will be based on the quantity they demand on a monthly basis. So, here's a question: Is the current price (or at least the non-speculative part) of XRP based (mostly) on the current quantity (the quantity not in escrow) or based on the total supply?
Of course, the price depends on the proportions of the different types of buyers in the marketplace: (a) optimistic buyers who want to buy as much as they can right now, (b) buyers who know their ideal quantity demanded and are trying to space out their buys, and (c) risk-averse buyers whose prices/demand is only based on current supply not locked up in escrow. What do you believe is the proportion of each of the types of buyers currently?
(4) There may be a lot of price volatility around the date of the release each billion XRP from escrow, at least for the first few monthly releases. If Ripple plans to sell the released XRP at the market price, how will it (or can/should it) deal with the volatility in setting the price? Will all the 1 billion XRP be released at once? Or gradually over the month?
Thank you! I look forward to an insightful discussion!