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Why does the value of Ripple (XRP) have to change? Why is it worth more than a common postage stamp?


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Posted (edited)
On 3/14/2020 at 9:44 PM, Honest_Bob said:

...but don't give up on the stock market. It will bounce back quickly, especially when new cases start to decline or progress is made on a vaccine.

We'll all look back on March 2020 and see that it was the best time in our life to quickly build wealth through shares.
 

But I was right about shares. You heard it here first, back in March, a few days before the bounce back started.

Edited by Honest_Bob
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Holding XRP is somewhat like holding a zero coupon bond that pays out in around 100,000 XRPL transactions (not considering fee escalation reducing that #)  As XRPL is plugged into more and more c

Listen to Greg Kidd use the postage stamp analogy, just before 7:00. I have also used this since the early days, and the reason for WHY? is the basis for Utility Value. Just like a postage stamp

At mark 6:30 Greg Kidd uses my postage stamp analogy.  I'm pretty sure I was the first to make the postage stamp analogy. With the wallet being the mailbox, Gatewayd being the post offi

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Posted (edited)
On 3/17/2018 at 9:23 PM, Honest_Bob said:

Why is it worth more than a common postage stamp?

Listen to Greg Kidd use the postage stamp analogy, just before 7:00. I have also used this since the early days, and the reason for WHY? is the basis for Utility Value.

Just like a postage stamp for a small local town's own postal network would not have much utility value in compairison to a postage stamp with UPS who's network can deliver a package anywhere in the world... XRP will not have much utility value, until the XRPL has a large network of connections and can move value anywhere in the world.

Also, XRP can be the value in the package, plus the stamp on the package paying the TX fee for the package to move through the XRPL network.

 

Ripple is trying to position XRPL as the "node" in the new global monetary infrastructure's network/ledger with the highest Eigenvector. Eigenvector is a metric used in graph and network analysis, this is basically the mathematical way of saying, "Its who you know, not how many people you know". Google's PageRank started out essicentially measuring webpage's eigenvector, then their search algo grew from there. 

Consider each ledger to be a 'node', and consider XRPL to be the node with the most connections to the most important other nodes (FIs and CBs or those who "custody of value").

Quote

In graph theory, eigenvector centrality (also called eigencentrality or prestige score) is a measure of the influence of a node in a network. ... A high eigenvector score means that a node is connected to many nodes who themselves have high scores.

https://en.wikipedia.org/wiki/Eigenvector_centrality

(not to confuse, just want to point out the functional similarity...  you can think of XRPL's Pathfinding, as preforming the same search function as Google's search algo. Except it is searching TX pathways on XRPL, not websites and their backlinks). Consider having to pay 0.00012 (XRP) per search, instead of paying for your search by viewing ads.

Edited by KarmaCoverage
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Very interesting presentation by Greg Kidd. Makes a lot of sense. Not sure why banks are not adopting the Ripple protocol more quickly. Interesting to hear that their protocol is used with all currencies including fiat and bitcoin. And XRP. And it doesn't depend on the existence of the Ripple company (just like SMS texts don't rely on SMS Corp). It's just a protocol that anyone can use with or without Ripple.

I guess the great uncertainty is what should an XRP be worth? (This is the same key question for all assets, even postage stamps - how are value and price determined?) A nominal gold-backed or dollar-backed value seems to make sense to me instead of the current fluctuating and unpredictable value (or price) based on speculation, hopefulness and guesswork.

Imagine if fiat currencies were valued as XRP currently is. It would be chaos. And no-one would want to hold onto it because its value will unexpectedly and unpredictably change. Would you want your life savings in an unstable (or more unstable) currency? I don't. The world can't function with an unstable currency.

When XRP has a stable value (similar to the stability of the dollar), it will take off. But I suppose speculators, gamblers and investors present here on XRP Chat won't be happy with that.

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1 hour ago, Honest_Bob said:

When XRP has a stable value (similar to the stability of the dollar), it will take off. But I suppose speculators, gamblers and investors present here on XRP Chat won't be happy with that.

No, this is a wide spread misunderstanding. We must distinguish between stability and volatility. XRP doesn't need to be stable to work, it can easily have a steady growth. In practice we see already that price does not influence the payments.

A high volatility is a different matter because that needs to be compensated by Market Makers. Considering that no one will earn money making a payment, the gains and of course losses can be compensated but it is an issue, stability is not a requirement.

Edited by Frisia
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37 minutes ago, Frisia said:

No, this is a wide spread misunderstanding. We must distinguish between stability and volatility. XRP doesn't need to be stable to work, it can easily have a steady growth. In practice we see already that price does not influence the payments.

A high volatility is a different matter because that needs to be compensated by Market Makers. Considering that no one will earn money making a payment, the gains and of course losses can be compensated but it is an issue, stability is not a requirement.

I understand and accept that stability isn't a requirement due to the fast speed of transactions which prevents losses (and gains). But wouldn't it be better to be stable? When has instability ever been a good thing? Why does the price have to change? (This is the key question of this thread.) Why do you want it to grow? What valid and useful purpose does growth serve? What would happen if there is no growth in its price?

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Holding XRP is somewhat like holding a zero coupon bond that pays out in around 100,000 XRPL transactions (not considering fee escalation reducing that #) 

As XRPL is plugged into more and more corridors, the potential utility value of a transaction grows. Right now, XRPL is like the guy with the first telephone. They have it connected to Mexico, USD, Philippines, etc. but they still have a lot of growing to do, and each additional corridor will add (at an increasing rate) value to the utility of a transaction on the XRPL network.

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Posted (edited)
12 hours ago, Honest_Bob said:

I understand and accept that stability isn't a requirement due to the fast speed of transactions which prevents losses (and gains). But wouldn't it be better to be stable? When has instability ever been a good thing? Why does the price have to change? (This is the key question of this thread.) Why do you want it to grow? What valid and useful purpose does growth serve? What would happen if there is no growth in its price?

If the value is higher you have more stability.  At the moment to transfer a million dollars you need to find a seller with 5 million XRP and a buyer who wants 5 million XRP and that might well hit the price at both ends.  At the moment most transactions are made in small parcels of about 20 -30 k, but as the system grows they need to grow those package sizes to handle the higher volume of transactions.

We are expecting ODL to grow from a few million a day to a few billion a day, and even then it will be a small fraction of SWIFT daily transactions- a thousand fold increase in volume.

Edited by Julian_Williams
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Just now, aye-epp said:

wouldn't bitcoin invalidate this argument?

It's more of a "relative to tick size" argument.

If tick size is $0.01

  • 10 ticks on a $1.00 asset is a 10% move
  • 10 ticks on a $10.00 asset is a 1% move

If you consider tick size to be x% percentage move, then the relative to tick size view point loses some teeth.

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18 hours ago, Honest_Bob said:

I understand and accept that stability isn't a requirement due to the fast speed of transactions which prevents losses (and gains). But wouldn't it be better to be stable? When has instability ever been a good thing? Why does the price have to change? (This is the key question of this thread.) Why do you want it to grow? What valid and useful purpose does growth serve? What would happen if there is no growth in its price?

My investment thesis in XRP hinges on increased liquidity will result in an ever increasing XRP price.  As more and more utility is discovered in XRP and more market participants leverage this utility price will need to rise.  The benefits of a rising XRP price and deeper liquidity are the ability for XRP to serve other larger use cases.  It’s beautifully serving to improve back office treasury operations at remittance firms and corporates now but we are just getting started.  With deeper liquidity it could be the grease in the FX markets serving to bring greater efficiencies to a trillion dollar market.  This just can’t happen... yet.  

Separately, I’m speculating that as XRP delivers real world utility to the largest institutional players in global finance it will serve as a greater and greater store of value, a superior one to Bitcoin.  Only time will tell how all this will play out but increasing demand with static or decreasing supply typically is a good thing if you hold some of that supply.  ODL volumes indicate we are on the right path.  

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On 6/7/2020 at 10:27 PM, xerxesramesepolybius said:

Who uses stamps anymore?

And who uses XRP (as an actual currency, not just for speculating)?

In 2019, 16.5 billion US postage stamps were printed, mostly for their prime intended purpose (ie, pre-paying for the delivery of mail).

How many XRP were used in the US in 2019 for their prime intended purpose (ie, pre-paying for the delivery or transfer of money)?

Just curious...

 

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