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BTC supply vs Xrp supply

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If the Fed would only stop making the penny the smallest divisible amount of a dollar and stick with the dime we’d all be a lot richer because dollars would be more scarce!

And I’ll need more money because the pizza shop down the street started cutting their 8 piece pizzas into 6 pieces    . They are now so scarce they can hardly keep them in stock and the price has doubled in a week  I just hope they don’t realize what they’ve done and . . . Start cutting them into FOUR pieces. 

SMH

Edited by ringer2

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1 hour ago, ringer2 said:

If the Fed would only stop making the penny the smallest divisible amount of a dollar and stick with the dime we’d all be a lot richer because dollars would be more scarce!

And I’ll need more money because the pizza shop down the street started cutting their 8 piece pizzas into 6 pieces    . They are now so scarce they can hardly keep them in stock and the price has doubled in a week  I just hope they don’t realize what they’ve done and . . . Start cutting them into FOUR pieces. 

SMH

You're not thinking about this in the right way. The dollar is not comparable to cryptocurrency (and BTC and XRP in particular) because there isn't a fixed supply of dollars. 

As speculative assets that can increase in value against the dollar, the divisible units of BTC and XRP matter because it allows more people to enter the market and express positions on the asset. 

For instance, taking your pizza analogy, let's say we have Pizza A and Pizza B. Pizza A is divisible by 4 slices, and Pizza B is divisible by 12 slices. Let's say you distribute those slices to different people. Now 4 people own 1 unit of Pizza A and 12 people own 1 unit of Pizza B. Now let's assume 1 unit of Pizza A is worth $100 (so $25 / slice) and 1 unit of Pizza B is $300 (again, $25/slice). Would you rather be an owner of Pizza A or Pizza B? In the case of Pizza B, it's simply the case that you risk more people expressing an opinion on the asset and diluting its value through profit taking or panic selling, etc.  

Edited by HenrySeldom

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This is a topic that could have a lot written about it, and is a fascinating topic to me that has a lot of implications in monetary economics. Here is a short version of my take, and many of these points have already been said.

As long as a crytpo currency has sufficient places after the decimal point to function, as long as the standard unit represents an amount of value that is easy for people to comprehend (too many leading or trailing zeroes is hard for mental math), and as long as we're talking a fixed supply coin (only for simplicity- it actually doesn't matter), it doesn't matter what the supply is, or where the decimal point is placed. All coins have the same supply, 1, and the thing that matters is what percentage of the supply you have.

Someone earlier asked if the number of places after the decimal (drops) on the XRPL could be changed. NikB and JK have both said yes, but it would be a non trivial undertaking to change it. I also recall someone from Ripple saying the number of XRP and drops that were initially chosen works well with the way computers do math. I can't elaborate on that last part, but either way, if there was a strong need to change the number of drops, it could be done. With the value of XRP where it is now, and most foreseeable values of XRP in the future, it's hard to imagine a need to change either where the decimal point is, which is really just a naming convention for the standard unit, or the total number of drops.

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Most, if not all fiat currencies are structured around a base unit which is further divisible into 100 smaller units. Such as usd, cad, eur, gbp.

This makes it easier to trade between these currencies as 1 unit of 1 currency is easily compared to another currency. The fact that BTC and xrp have different amounts of smaller units that make a whole unit means that the only meaningful comparison you can make between them is by using their smaller unit. My original post prob shouldn't have mentioned any fiat values at all, that's not the point.

It was merely to highlight that the "huge" supply of xrp relative to supply of Bitcoin argument is flawed..

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45 minutes ago, rootvegetable said:

This is a topic that could have a lot written about it, and is a fascinating topic to me that has a lot of implications in monetary economics. Here is a short version of my take, and many of these points have already been said.

As long as a crytpo currency has sufficient places after the decimal point to function, as long as the standard unit represents an amount of value that is easy for people to comprehend (too many leading or trailing zeroes is hard for mental math), and as long as we're talking a fixed supply coin (only for simplicity- it actually doesn't matter), it doesn't matter what the supply is, or where the decimal point is placed. All coins have the same supply, 1, and the thing that matters is what percentage of the supply you have.

Someone earlier asked if the number of places after the decimal (drops) on the XRPL could be changed. NikB and JK have both said yes, but it would be a non trivial undertaking to change it. I also recall someone from Ripple saying the number of XRP and drops that were initially chosen works well with the way computers do math. I can't elaborate on that last part, but either way, if there was a strong need to change the number of drops, it could be done. With the value of XRP where it is now, and most foreseeable values of XRP in the future, it's hard to imagine a need to change either where the decimal point is, which is really just a naming convention for the standard unit, or the total number of drops.

AFAIK XRP designed as 64bit integer value. (approx. 1.8*10^19) Roughly speaking half of digits represents the fractional part and the other part represents the integer part.
100.000.000.000 was the closest round number that can be represent in the integer part.
That was the history of choosing the amount of XRP.
So Of course we can choose "bigger" Drops definition,
 but "smaller" Drops can be chosen max. one or two decimal point lower. (If I am not mistaken)

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4 minutes ago, Leprecoin said:

It was merely to highlight that the "huge" supply of xrp relative to supply of Bitcoin argument is flawed..

Agreed. They both have the same supply, which is divisible to differing degree. The only main difference is what percentage of the whole the standard unit represents.

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It's like comparing tesla and BMW.

You could say: "hey there are only 10 tesla and 100 BMW, but tesla is made up of 1000 pieces while BWM only 100, so they should have the same value!" --> bullsh!t and nonsense.

If you scale down to drops and satoshis you'll have also to divide the prices accordingly

What matters at the end is the total value of the supply, i.e. the market cap.

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15 minutes ago, tulo said:

It's like comparing tesla and BMW.

You could say: "hey there are only 10 tesla and 100 BMW, but tesla is made up of 1000 pieces while BWM only 100, so they should have the same value!" --> bullsh!t and nonsense.

If you scale down to drops and satoshis you'll have also to divide the prices accordingly

What matters at the end is the total value of the supply, i.e. the market cap.

Exactly. 

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5 hours ago, Leprecoin said:

"This is nonsense. Cutting a pizza into 8 slices doesn’t give you 8 pizzas."

This was a response, that I completely disagree with, on another thread regarding the total supply of satoshis vs the total supply of drops, and I feel the explanation deserves its own thread. The response was in relation to a post I made that xrp is in fact 100 times more scarce relative to Bitcoin than most people think. This raised its head a few months ago but seemed to fade away and many of our new investors mightn't realise how important this is..

If we use 21 million BTC vs 100 billion xrp, the ratio is 1: 4761.9, so for  every 1 Bitcoin, there is 4761.9 xrp

However, if we use the total supply of satoshis vs total supply of drops, our ratio is now 1: 47.619. This is due to Bitcoin being divisible to 2 further decimal places than xrp is.

Or in other words, there are 100x more satoshis per Bitcoin than there are drops per xrp.

When I first started investing in crypto, I wanted to be as diversified as possible. Instead of owning a certain amount of coins per crypto, I wanted to own a certain % of the total supply of coins of each of my chosen cryptos due to the fixed supply. 

So for every 1 Bitcoin I owned, I wanted to own one 21 millionth of total supply of each of the other coins. This translated to 4761.9 xrp per Bitcoin, to give me a ratio of 1:1. I was unaware of the difference or significance of decimal placing at the time. 

But when we break it down to satoshis vs drops, I actually own 100x more in terms of % of total supply of drops than I previously thought,

so my BTC vs XRP ratio is actually 1: 100 when we calculate in terms of satoshis vs drops. 

If we compare satoshis vs drops, and you own 4,761.9 xrp, and we then convert that to Bitcoin, you basically own the equivalent of 100 BTC in terms of your holdings vs the total supply of BTC. 

If Bitcoin can go to 1 million usd, this would be an equivalent xrp value of around $200 per xrp, and  that's using the1:4761.9 ratio,

however if we use the 1:47.619 ratio, it would give xrp a value of around $2,000 per coin. 

While this might seem absurd to some, I hope the above makes sense and it will show that xrp can go far,  far higher than most people think.

Very few people are aware of the decimal placing anomaly and I don't believe the market has this factored into the current price at all. 

In January we briefly touched XRP 4000:1 BTC

For now thats a goal to start with, @ $8900 that = $2.225 per XRP.

 

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44 minutes ago, tulo said:

"hey there are only 10 tesla and 100 BMW, but tesla is made up of 1000 pieces while BWM only 100, so they should have the same value!"

But does those parts individually hold any value wrt to a BMW or a Tesla?, without those parts in combination to make a BMW a BMW, they are worthless whoever owns them. Which is definitely not the case here.

Edited by anichhangani

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11 minutes ago, anichhangani said:

But does those parts individually hold any value wrt to a BMW or a Tesla?, without those parts in combination to make a BMW a BMW, they are worthless whoever owns them. Which is definitely not the case here.

If they are worthless, gimme the pack of battery of your tesla, or the motor of your BWM ;)

 

BTW I have another comparison:

In Europe the EUR (€) is divisible up to the single cent (1€ = 100 cents), but Indian rupee is not divisible. Does that make the EUR/INR price wrong because we have 100 times more EUR cents than rupees? NOT!

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1 minute ago, tulo said:

If they are worthless, gimme the pack of battery of your tesla, or the motor of your BWM ;)

By worthless, I didn't mean it literally, but relative to the price what the actual product sells. Also, you are not getting the point, can you buy an atom of gold in the market? but you can buy individual satoshis/drops.

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