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Zerpening Part 2: The Sequel


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14 minutes ago, Iconoclast said:

If Ripple directly receives cash from the sale of XRPs out of escrow then yes they are linked. It would mean that an asset on their balance sheet is worthless. Nothing in what I said means they are the same thing. And in a sense Ripple technology and XRP are inexorably linked. If they shut down xRapid tomorrow XRP would be worthless. XRP is not a SHARE in ripple it is an asset that the market and Ripple holds. And Ripple has access to billions of it. If that doesn't cover your expenses then it means its worthless. There is only marginal benefit to not having a greater supply. Considering right now there is marginal demand due to use, The supply is already too high. HOwever, if their dreams are to come true xRapid wise then they'll need more supply. So limiting circulating supply is a double edged sword.

An IPO would tell the market "Ripple needs money." Then think about the valuation. Ripple may not be XRP but they own the XRP in escrow. Value that. Do shareholders have to pay market value per zerp and then factor in the business (I talked about this before). If Ripple declares chapter 11 whats XRP worth? What is the liquidation value of Ripple when XRP sits on the balance sheet? Using Ripple tech and XRP is not the same thing. XRP and ownership is not the same thing. However, XRP is 100% reliant on Ripple the company (not vice versa though).

Remember Facebook's IPO raised $16B for the company. Ripple has access to 50B and more XRP. Even at half the current market price that is a huge amount of cash. Saying oh but we need an IPO would tell me as an investor that they don't think they could sell small amounts into the market to finance themselves. They get access to 1B per month. If the XRP price is 0.50 thats $500M per month they could potentially use for operations. So either their cash burn is Tesla levels, they are planning on being kleptocrats and just carrying money filled sacks out of the vault, or they can't actually raise $500M from sales of XRP. They'd need a one time IPO to fill their coffers. That doesn't bode well.

I think if people want part ownership, like big players, they'll do private placements. Because if Ripple goes huge, then I can't even guess at the potential revenues and profits. Actually, can anyone point me to that. Has anyone done an analysis of Ripple as an startup equity investment? Like potential revenue, margins, and growth?

 

Edit: Originally said FB raised $10B its been corrected to $16B. Remember what you raise is not the same as market cap. That valuation gave facebook a $100B+ capitalization.

No, that's wrong. 

A. XRP is an asset to Ripple, but if Ripple died, XRP wouldn't have to. David has mentioned that many times. 

B. When Facebook went public they had a massive asset. Their audience. They only needed to flip a switch to make billions. They're a debt free company who didn't necessarily need their IPO either. 

C. an IPO has nothing to do with a company struggling financially at all! In FACT it's usually the opposite! As a rule I do not "invest" into companies that "need" IPO money to pay their bills. Companies tend to do very well, grow large, and then go public to fund expansion. 

D. The amount of cash that Ripple the company has isn't even 100% relevant as we are not talking about cupcake shops opening a franchise anymore. we are talking about all of the worlds money combined. $50 billion is nothing. There are people with that much. individuals. 

E. XRP is a FINITE supply.  I don't think there is anything smarter for Ripple as a company to broaden its income streams (as it already does through xcurrent, etc) and improve it's warchest of working capital without selling off their precious zerps. They only have the 55,000,000,000 zerps. once they are gone they are gone. Ripple the company sure as heck had better be able to make a business case beyond eventually selling all their XRP or that is a SCAM. if all Ripple was created for was selling a hundred billion coins and then riding off into the sunset, then we are sitting in a pyramid scheme, my friend. But that is not the case. they are a payment settlement/tech company breaking down the old rules and bring new technologies to an existing huge industry. there is nothing wrong with IPO to cash flow that. 

F. XRP is one of their assets. They should not be expected to simply sell off all their assets to survive and call it good.

G. If Chevrolet only made 100,000,000,000 Cars, all at one time, and could never make another car ever again, would you say well they are good enough forever and they shouldn't invest in their own company? because they have plenty of cars to get them buy for lots of years? absolutely not. 

 

 

But, I digress. I do not mean to sound argumentative although i am opinionated, so I would also accept that it's time to agree to disagree because our perspectives ware wildly disconnected from one another on this topic. <fist bump>

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6 minutes ago, XRPHillbilly said:

I am a bit confused.  I logged into my Kraken account today and very easily purchased XRP with USD.  Very fast and easy.

You are correct. I am probably overstating.  But I have been waiting on month+ to get verified at Bitstamp.  I have been warned to steer clear of Kraken.  Combined with the general distrust of these exchanges - NEM theft, tether drama, I think it is too sketchy for a lot of investors.  Anecdotally, some family members were entirely opposed to investing until they saw the Coinbase UI which was clean, non intimidating and and understandable.  But they didn't want to invest in BTC, and didn't understand ETH, so LTC was all they could manage. 

 

 

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10 minutes ago, WrathofKahneman said:

I can't help but wonder how much of the problem in crypto world, assuming this is a normal adjustment, comes from the exchanges and the awkwardness to invest in anything other than BTC, ETH, and LTC directly here in the US.  People selling XRP on eBay last December seems evidence for an access problem, not desire problem.  At some point, the money in crypto will be astronomical - will it be as currency or transaction tokens?  Secure, easy access in a regulated environment will open things up.  3 years from now? 5 years?  Hodl on.  (also using a little to flip on the way down)

Yes I agree.

As investors we gain a huge premium right now because we have done the work to buy. We have located exchanges, found ways to get money into them and we've learned about wallets and how to store our coins. This is similar to "barrier to entry" ideals.  The easier it gets for people to enter a market place the thinner the profit margins get.

Right now for instance we are seeing a changing of the guard in healthcare. the barrier to entry has been far too high for far too long. profits got ridiculous (BTC $20k anyone??) so what do we have now? Amazon, Berkshire, JP morgan all talking about entering health care because wow, look at the potential. 

so now the profit margin to barrier to entry margin is so great that it's worth it for more players to enter the field, that's where the prices will start to become realistic again.

 

the same is true with crypto. we will see another massive run up in prices because crypto is about to get very easy for the masses to buy in during 2018. Apps like Robinhood will make that happen. 

so early adopters (us) who bought the hard way will be paid off when the new investors buy in.

they likely will see returns too. but instead of seeing 400% in a month they'll likely be more in line with traditional returns, although on the high side still for a while. 

 

however I also believe that in 2018 when we exponentially add to the number of investors in the market we will also DECREASE volatility because it simply is not as easy for 20 million people to make a quick and joint sell or buy as it is for 2 million or fewer people. 

Edited by RegalChicken
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1 minute ago, WrathofKahneman said:

You are correct. I am probably overstating.  But I have been waiting on month+ to get verified at Bitstamp.  I have been warned to steer clear of Kraken.  Combined with the general distrust of these exchanges - NEM theft, tether drama, I think it is too sketchy for a lot of investors.  Anecdotally, some family members were entirely opposed to investing until they saw the Coinbase UI which was clean, non intimidating and and understandable.  But they didn't want to invest in BTC, and didn't understand ETH, so LTC was all they could manage. 

 

 

Kraken has made some changes.  Big advantage is US based and can directly purchase XRP with USD via money transfer or credit / debit card.  I will no longer use Coinbase.  In my opinion, they screwed us all.

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Just now, XRPHillbilly said:

Kraken has made some changes.  Big advantage is US based and can directly purchase XRP with USD via money transfer or credit / debit card.  I will no longer use Coinbase.  In my opinion, they screwed us all.

They totally screwed their selfs with BTH fiasco, and that non sense announcement. I really belive RobinHood will take them down hard in the short term.  B)

Edited by LeGonze
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I don't believe coinbase screwed us all, and right now I "trust" them more than Robinhood.

however if Robinhood goes to XRP first I'll probably make weekly and maybe daily buys on robinhood. 

with that said, if Coinbase offers XRP support with the ability to actually send money from my wallets back and forth before robinhood does, then I'll dump my robinhood holdings and move back to coinbase.

I think coinbase screwed up and learned from it. I truly don't believe they are a 'bad' company. I think they are one of the more legit ones and more pulled together companies in the industry to be honest. 

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23 minutes ago, RegalChicken said:

No, that's wrong. 

A. XRP is an asset to Ripple, but if Ripple died, XRP wouldn't have to. David has mentioned that many times. 

B. When Facebook went public they had a massive asset. Their audience. They only needed to flip a switch to make billions. They're a debt free company who didn't necessarily need their IPO either. 

C. an IPO has nothing to do with a company struggling financially at all! In FACT it's usually the opposite! As a rule I do not "invest" into companies that "need" IPO money to pay their bills. Companies tend to do very well, grow large, and then go public to fund expansion. 

D. The amount of cash that Ripple the company has isn't even 100% relevant as we are not talking about cupcake shops opening a franchise anymore. we are talking about all of the worlds money combined. $50 billion is nothing. There are people with that much. individuals. 

E. XRP is a FINITE supply.  I don't think there is anything smarter for Ripple as a company to broaden its income streams (as it already does through xcurrent, etc) and improve it's warchest of working capital without selling off their precious zerps. They only have the 55,000,000,000 zerps. once they are gone they are gone. Ripple the company sure as heck had better be able to make a business case beyond eventually selling all their XRP or that is a SCAM. if all Ripple was created for was selling a hundred billion coins and then riding off into the sunset, then we are sitting in a pyramid scheme, my friend. But that is not the case. they are a payment settlement/tech company breaking down the old rules and bring new technologies to an existing huge industry. there is nothing wrong with IPO to cash flow that. 

F. XRP is one of their assets. They should not be expected to simply sell off all their assets to survive and call it good.

G. If Chevrolet only made 100,000,000,000 Cars, all at one time, and could never make another car ever again, would you say well they are good enough forever and they shouldn't invest in their own company? because they have plenty of cars to get them buy for lots of years? absolutely not. 

 

 

But, I digress. I do not mean to sound argumentative although i am opinionated, so I would also accept that it's time to agree to disagree because our perspectives ware wildly disconnected from one another on this topic. <fist bump>

A. I'm sure there is case for this. I don't buy it at all. Maybe in the same way that some piece of crap security on the OTC market can be used as a shell for a real company and rise again. XRP for xRapid is the core of my investment thesis.

B. But facebook's audience is not something they can squeeze for capital. XRP is basically a liquid asset. Facebook needed the money to fuel rapid expansion. Ripple's situation is completely different. They don't need a huge cash pile to buy other companies. Their main thing is getting customers on board. They are not capital intensive, and unlike facebook I don't think they need to diversify away from their core business due to monetization issues.

C. It gives healthy companies capital to let them expand faster. Its true that IPO is not for troubled companies, but Ripple is not profitable. Then again SNAP wasn't profitable. Their IPO was a handout. Ripple's IPO would be to continue what we are doing, while they are sitting on potentially billions on their balance sheet. Unless its not billions, and an IPO would admit as much. Even if Ripple said we need this IPO because we want to buy X company, people would wonder why they aren't putting up more money from XRP sales. Its just how it is. You can disagree all you want, but I'm 97% you'd be left holding the bag if Ripple went IPO and you're like this is no biggie.

D. Is this even a point? I mean not to sound flippant, but Ripple isn't buying all the currency in the world. An IPO brings cash into the company in excahnge for equity. The money is used for expansion and to finance operations. What the heck are you talking about? If you're talking about institutions transferring money you know RIpple doesn''t buy the assets and hand deliver them right? With xCurrent and xRapid it is the user's assets that get sent to the other party. Ripple is the facilitator. I'm honestly not sure what you meant here. The "all the currency in the world" is about XRP's ability to transfer value, but Ripple is not involves in that actual transaction. It has nothing to do with the cash on Ripple's balance sheet. Unless you think Ripple's master plan is to acquire all the currency on the planet to force people to use XRP (in which case they'd just flood the market with USD and fail anyway). So lets just strike this one as a nothing.

E. Eventually Ripple will have to make money of transaction fees or license fees. Thats its business. Selling XRP is only supposed to be an initial solution. Just like how an IPO isn't designed to finance you forever. The company needs its own profitability. Now swap IPO for XRP and they are using XRP to play the same role an IPO would play for a capital injection. Not saying it needs to last forever. But if they go IPO now saying we need cash then it tells me something about what they think the XRP on their balance sheet is worth. Eventually the company would make its own money. The currency it chooses to be paid in is its own choice. I'd rather have the escrow run down sooner, because that means people need Zerps for xRapid. In the mean time cash from the sales of Zerps has to go somewhere and it is to operations as Brad has said. And if they can't sell it, that would mean no one is buying.

F. Its a liquid asset that has no utility other than being used in the xRapid system. That is like saying companies should not be forced to sell their short-term treasuries to pay their bills because it is an asset. Its not a factory.

G. You're confusing XRP with Ripple's product. Ripple as a company makes money a different way. Selling XRP is not "operating revenue" so don't compare it to Chevrolet making cars. It is more like Chevrolet selling office chairs of people it fired for cash, and thats not even that close, but its closer since its non-operating revenue. For example, I don't think Apple's interest on its massive cash hoard (ignore the debt right now) should count as operating income. Their business is not generate interest payments on massive cash hoards.

 

Anyway, I'm not taking your responses personally. I actually think this back and forth has been super informative for the readers, and for me.

Edited by Iconoclast
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34 minutes ago, RegalChicken said:

In the test, it will be confirmed that overseas remittances will be smoothly carried out under various conditions that were not checked in the previous two tests. In addition, it plans to discuss with the Bank of Japan on whether it will commercialize overseas remittance using ripple block chain technology.

This is actually quite interesting and IMO very exciting.

We know there are multiple live tests going on with xCurrent and xRapid right now, during a period of the most turbulence the crypto market has ever seen. If these tests and pilots come back successful under these conditions - which could probably not be simulated in a sandboxed environment - it will prove that Ripple's network can withstand the most extreme market conditions and it could be expected that commercial uptake may happen even faster than anticipated.

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5 minutes ago, Iconoclast said:

 

I mean to summarize, I just don't think there are any negatives with the IPO route, personally. That's all.  And it's not like they have to give up control of the company via IPO anyways. The silicon valley method has been to maintain complete control.  If anything, I think an IPO on Wall Street for Ripple would be wildly successful and only shed more light and exposure on the company and technology. Possibly further legitimizing themselves.

But possibly not. I am also not someone who wants Ripple to IPO. I just don't think its particularly negative. 

 

Anyhoo, date night so I'm out of  here! keep the zerps warm guys :D

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I came up with this analogy when replying to someone on twitter and thought id share it here as a little bit of positivity...

(Feel free to add "to the moon" at the end when you read it) ?

I imagine these troubling times in the market as a caterpillar entering its chrysalis stage. To the untrained eye it looks as if we are dying, but we will emerge, a strong, beautiful and fresh butterfly with wings ready to fly!

 

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33 minutes ago, RegalChicken said:

I mean to summarize, I just don't think there are any negatives with the IPO route, personally. That's all.  And it's not like they have to give up control of the company via IPO anyways. The silicon valley method has been to maintain complete control.  If anything, I think an IPO on Wall Street for Ripple would be wildly successful and only shed more light and exposure on the company and technology. Possibly further legitimizing themselves.

But possibly not. I am also not someone who wants Ripple to IPO. I just don't think its particularly negative. 

 

Anyhoo, date night so I'm out of  here! keep the zerps warm guys :D

On this, I agree with almost all you said. Granted, I think wall street learned a lesson from SNAP, and Facebook is catching flak for Zuck's iron fist. But no they wouldn't need to give up control at this point. I think an IPO would work once XRP is off the balance sheet (just makes it easier to value) and if lots of people are using xRapid wall street will be salivating. BUt I think really what will happen is that huge success will mean someone buys it. I bet one of those huge Japanese companies. It'll be like Softbank plus another company join in to buy it as  a JV cuz softbank buys everything.

THey just have to keep the news coming.

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