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Julian_Williams

Vulnerable XRP

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Thinking about the reasons for volatility:  In January one XRP token was momentarily valued at $3.4, today it is valued at $0.34.  Could this happen to oil shares? The answer is only after something catastrophic had happened to the company and its assets, such as BP's Deepwater Horizon the Gulf of Mexico oil spill which cost BP 42 billion to clear up.  BP shares lost 50% of their value and fell from 600 to 300 in the following months.

Of course XRP is not a share in Ripple, it is a token and its value is not anchored by bankable assets owned by Ripple.  Theoretically XRP could fail and become a valueless digital memory however given the solid progress made by Ripple Labs in setting up the infrastructure on which XRP will run, the price of XRP should have risen instead of fallen.  This would have been strange behaviour if XRP were a share. 

It seems to me that crypto are difficult to value because they have weak anchorage with things in the real world.  Bitcoin has a weak anchor to Tether (itself open to accusations of creative accounting) dwindling usage figures and reputation of connections with criminal gangs wanting to find ways to violate  financial regulations.  BTC other reputation as a store of value has been tarnished by the big crash of value since January.   BTC does not deserve to be doing well.

XRP is anchored to the reputation of BTC but it is also anchored to the good work of Ripple Labs and by now the positive effects of Ripple Labs infrastructure should have overwhelmed the negative effects of being related to BTC failure.  What XRP is missing is something solid that can be called an asset, such as usage or a model of predictive outcome for the value of XRP should it be successful.  When I joined XRP chat in mid March there was one thread that attempted to make a model predicting what the value of XRP would be if XRapid usurped SWIFT - this is the thread.  

In that thread was a spreadsheet model made by Mpolnet  from which I derived this table of penetration of Swift against the models speculated value

0.76% = $7.53

1.9% = $9.75

3.6% = $12.68

5.9% = $16

18% = $53

33% = $116

43% = $132

For me this is the sort of anchorage information that connects speculation about XRP value with the real world is the sort of knowledge that itself provides an asset that would stabilise XRP volatility.  We need more of this work.  I suppose Ripple will not produce their models until after the security issue has been settled

Edited by Julian_Williams

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Julian, I do not think ripple will or should ever again associate itself with XRP in any way other than recognising it as a digital assett to power their growing network. XRP will find its own price level in the market. Any talk about the potential future value of XRP by Ripple would surely be folly. Discuss and promote the use cases yes but leave the analyists and the market to speculate price.

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39 minutes ago, rainbowhunter said:

I do not think ripple will or should ever again associate itself with XRP in any way

Ripple sold $78M of its XRP last Q2 Report.

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2 minutes ago, rainbowhunter said:

OK requote "I do not think ripple will or should ever again associate itself with XRP Price in any way"

When did they?

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Thinking about the reasons for volatility:  In January one XRP token was momentarily valued at $3.4, today it is valued at $0.34.  Could this happen to oil shares? The answer is only after something catastrophic had happened to the company and its assets, such as BP's Deepwater Horizon the Gulf of Mexico oil spill which cost BP 42 billion to clear up.  BP shares lost 50% of their value and fell from 600 to 300 in the following months.
Of course XRP is not a share in Ripple, it is a token and its value is not anchored by bankable assets owned by Ripple.  Theoretically XRP could fail and become a valueless digital memory however given the solid progress made by Ripple Labs in setting up the infrastructure on which XRP will run, the price of XRP should have risen instead of fallen.  This would have been strange behaviour if XRP were a share. 
It seems to me that crypto are difficult to value because they have weak anchorage with things in the real world.  Bitcoin has a weak anchor to Tether (itself open to accusations of creative accounting) dwindling usage figures and reputation of connections with criminal gangs wanting to find ways to violate  financial regulations.  BTC other reputation as a store of value has been tarnished by the big crash of value since January.   BTC does not deserve to be doing well.
XRP is anchored to the reputation of BTC but it is also anchored to the good work of Ripple Labs and by now the positive effects of Ripple Labs infrastructure should have overwhelmed the negative effects of being related to BTC failure.  What XRP is missing is something solid that can be called an asset, such as usage or a model of predictive outcome for the value of XRP should it be successful.  When I joined XRP chat in mid March there was one thread that attempted to make a model predicting what the value of XRP would be if XRapid usurped SWIFT - this is the thread.  
In that thread was a spreadsheet model made by Mpolnet  from which I derived this table of penetration of Swift against the models speculated value
0.76% = $7.53
1.9% = $9.75
3.6% = $12.68
5.9% = $16
18% = $53
33% = $116
43% = $132
For me this is the sort of anchorage information that connects speculation about XRP value with the real world is the sort of knowledge that itself provides an asset that would stabilise XRP volatility.  We need more of this work.  I suppose Ripple will not produce their models until after the security issue has been settled
Quiet honestly I think these are very conservative numbers.

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When Ripple sells large chunks of XRP, are they allowed to change the name of said chunk. Example: if Bank A buys XRP from Ripples stock and not on the market to initiate their xCurrent workflow... is there any incentive, is it legal, would there be any way to trace it if Bank A takes the XRP they Bought from Ripple and renames it "Bank A Token"?

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Julian, I appreciate your considered comments.  Not many here take the time to rationalize statements.

I had a look at the model.  It makes naive assumptions about adoption, namely, it makes no reference to competition or known confounding factors like governmental regulation.

There's no surprise in the finance sector about Ripple's offerings in general or XRP in particular.  So the price volatility is unlikely to be instigated by large players.  I suggest instead that large players react to price to maximise their purchasing power, ie. they expect speculation to drive the price and react by buying or selling in volume as dictated by their needs.  Remember that FX traders are good at this...

So until retail opportunities present themselves and while the pool of XRP remains in the hands of a few, the price will remain volatile.

In terms of models, I think the things to look at are transaction volumes as a function of time and XRP distribution.  Another tell tale would be the change in XRP pool over time.  Are large trades correlated with players who got into the market early?  What is the distribution of XRP amongst holders, eg. What proportion of holders individually hold more than 1% of XRP?

 

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10 hours ago, Julian_Williams said:

Thinking about the reasons for volatility:  In January one XRP token was momentarily valued at $3.4, today it is valued at $0.34.  Could this happen to oil shares? The answer is only after something catastrophic had happened to the company and its assets, such as BP's Deepwater Horizon the Gulf of Mexico oil spill which cost BP 42 billion to clear up.  BP shares lost 50% of their value and fell from 600 to 300 in the following months.

Of course XRP is not a share in Ripple, it is a token and its value is not anchored by bankable assets owned by Ripple.  Theoretically XRP could fail and become a valueless digital memory however given the solid progress made by Ripple Labs in setting up the infrastructure on which XRP will run, the price of XRP should have risen instead of fallen.  This would have been strange behaviour if XRP were a share. 

It seems to me that crypto are difficult to value because they have weak anchorage with things in the real world.  Bitcoin has a weak anchor to Tether (itself open to accusations of creative accounting) dwindling usage figures and reputation of connections with criminal gangs wanting to find ways to violate  financial regulations.  BTC other reputation as a store of value has been tarnished by the big crash of value since January.   BTC does not deserve to be doing well.

XRP is anchored to the reputation of BTC but it is also anchored to the good work of Ripple Labs and by now the positive effects of Ripple Labs infrastructure should have overwhelmed the negative effects of being related to BTC failure.  What XRP is missing is something solid that can be called an asset, such as usage or a model of predictive outcome for the value of XRP should it be successful.  When I joined XRP chat in mid March there was one thread that attempted to make a model predicting what the value of XRP would be if XRapid usurped SWIFT - this is the thread.  

In that thread was a spreadsheet model made by Mpolnet  from which I derived this table of penetration of Swift against the models speculated value

0.76% = $7.53

1.9% = $9.75

3.6% = $12.68

5.9% = $16

18% = $53

33% = $116

43% = $132

For me this is the sort of anchorage information that connects speculation about XRP value with the real world is the sort of knowledge that itself provides an asset that would stabilise XRP volatility.  We need more of this work.  I suppose Ripple will not produce their models until after the security issue has been settled

I am OOL.

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On 8/10/2018 at 1:16 PM, rainbowhunter said:

OK requote "I do not think ripple will or should ever again associate itself with XRP Price in any way"

 

While Ripple will try as best it can to put some distance between itself and XRP, the fact remains that the two are irrevocably linked to each other. I think they just need to bite the bullet and "own" the situation. All of this contortionist jujitsu they are trying to do to differentiate themselves is a moot point at the present moment. They own the lion's share of XRP and are the largest benefactor/contributor to the XRP-Ledger as of right now. They are still selling several million dollars worth of XRP to help with day-to-day operations and building the network and use-cases for XRP, the XRP-Ledger, RippleNet, xPring, SBI Consortium, etc. This sudden move to distance themselves from XRP just seems to have Cory Johnson written all over it. I for one think it's a poor strategy. I could see if Ripple did not have a decentralization plan in place for the distribution of their XRP holdings as well as node validation, but they do (XRP Decentralization and Consensus Plan). They have been following this plan and executing this plan with laser-like focus and accuracy. I feel like this almost "knee-jerk" reaction to this situation just validates the BS the naysayers have been saying. Just because Ripple isn't following the same "cookie cutter" path to decentralization like every other blockchain organization out there doesn't mean they are some sort of scam company as many argue. To my knowledge, there isn't a Crypto bible out there that mandates a certain path/process for decentralizing a blockchains network etc. BTC and ETH both have varying degrees of centralization when it comes to the distribution of their respective crypto-assets and mining operations. Also, at least Ripple provides visibility with respects to their Escrowed XRP holdings--when each billion worth of XRP is released and how much of the previous month worth of XRP was not utilized and placed back into escrow. Ripple even takes additional steps by providing transparency via quarterly XRP Markets Reports to show the sale of their XRP holdings. 

Edited by King34Maine

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12 hours ago, Wizann said:

When Ripple sells large chunks of XRP, are they allowed to change the name of said chunk. Example: if Bank A buys XRP from Ripples stock and not on the market to initiate their xCurrent workflow... is there any incentive, is it legal, would there be any way to trace it if Bank A takes the XRP they Bought from Ripple and renames it "Bank A Token"?

Well, a name is just a name, but there's value associated with the name "XRP". If a bank pretended that they held their own token instead of XRP then I doubt anybody would do any transactions with them using it. But it would be very obvious if anybody ever did try to use "Bank A Token" that it's actually XRP. It's completely traceable. They can't take their XRP off the XRP Ledger and move it to their own.

Alternatively, Bank A could fork the ledger, and call the fork whatever they want, but the forked token would have close to zero value and utility (to begin with), and be completely centralized.

Regarding the legality of it, I doubt it's illegal in general to market XRP under a different name, as it's an open source project. But I don't know if banks might have regulations that require them to accurately represent their holdings?

Does that answer your question?

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14 hours ago, Wizann said:

are they allowed to change the name of said chunk

The chunk doesn't have a name.  It's an amount of XRP.   It's not an amount of Bitcoin or Etherium.  You could call it Etherium or Bank A Coin if you like but the XRP is a balance on the XRP ledger, and you can't make it transact on the Etherium blockchain, and Bank A doesn't even have a blockchain.  Or if it does they are not XRP on it.

Its a particular animal and it does and looks exactly like that animal and no other.  Calling it a Antelope won't make it into an Antelope.

What you asked might sound OK in words but can't be done in actuality.

Edited by Tinyaccount
Added a bit more clarity

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