Jump to content

Price variance during transaction and...


KingSolomon
 Share

Recommended Posts

Has ripple explained how  companies will be dealing with the 5-10sec lag when exchanging (buying/selling) ripple?

some transactions can potentially cost hundreds of thousands, while others make that much. Who gets the profit/losses?

Potential explanation: 

For ex: if this is to be between 2 banks, it would make sense for banks to hold unto XRP

Bank A and Bank B both have 500M of XRP, and during transactions, they instantly buy/sell XRP when agreed

so the transfer time doesn't affect anyone. It would then be up to the banks' discretion when to buy/sell to keep their residual XRP balance at X. 

 

Follow up: 
This further opens up new questions: why would institutions bother buying up XRP (which they have been)?

Which cycles back to "what mechanism [beside speculation] is expected to drive the price of XRP?"

 

Link to comment
Share on other sites

It doesn't move enough in 4 seconds for it to be an issue. 

In the real world of large corporate payments it's in the contract which party covers the exchange loses. Or a third party market maker covers the loss. 

Again 4 seconds isn't enough time to make a massive difference unless you're moving trillions of dollars. 

Lastly price is tied to volume and value of the network. 

Edited by keybordem
Link to comment
Share on other sites

1 hour ago, KingSolomon said:

Has ripple explained how  companies will be dealing with the 5-10sec lag when exchanging (buying/selling) ripple?

some transactions can potentially cost hundreds of thousands, while others make that much. Who gets the profit/losses?

Potential explanation: 

For ex: if this is to be between 2 banks, it would make sense for banks to hold unto XRP

Bank A and Bank B both have 500M of XRP, and during transactions, they instantly buy/sell XRP when agreed

so the transfer time doesn't affect anyone. It would then be up to the banks' discretion when to buy/sell to keep their residual XRP balance at X. 

 

Follow up: 
This further opens up new questions: why would institutions bother buying up XRP (which they have been)?

Which cycles back to "what mechanism [beside speculation] is expected to drive the price of XRP?"

 

#FUDALERT #NOOB 

/Thread

Link to comment
Share on other sites

11 minutes ago, NightJanitor said:

Credit risk and time?  XRP is (among other things) its own settlement asset.

Settlement asset with slight lag. I don't see why a bank would not settle this on anything but futures market. I'm not sure i follow re: credit risk. 

 

On a 100M transfer .05% variance is 500k. If you are not comfortable seeing this as a loss, then how about a gain?  Who gets to keep the extra money? Split?

 

If this is a noob question, please, someone kindly refer to source/link that explains this. Thanks much!!!

 

Link to comment
Share on other sites

From Telegram XRP Chat Admin, the best, and most sensible response I got is with reduction in settlement time with Cobalt to 1-2s, the banks will just leverage the price volatility in how much they charge their customers to transfer. 

 

Any other feedback appreciated. 

Link to comment
Share on other sites

14 minutes ago, KingSolomon said:

Settlement asset with slight lag. I don't see why a bank would not settle this on anything but futures market. I'm not sure i follow re: credit risk. 

 

On a 100M transfer .05% variance is 500k. If you are not comfortable seeing this as a loss, then how about a gain?  Who gets to keep the extra money? Split?

 

If this is a noob question, please, someone kindly refer to source/link that explains this. Thanks much!!!

 

The exact same problem already exists in the FX markets and the way it is minimised is through competition between market makers i.e whoever has the tightest spreads gets the customers.

Link to comment
Share on other sites

36 minutes ago, KingSolomon said:

Why even have any volatility at all and not just settle as futures contracts?

Thanks for the responses. 

Third party makes sense, as a party that is long on XRP in short and medium- term. 

Xrp settles faster than anything on the planet. There is barely any volatility whatsoever

Link to comment
Share on other sites

12 minutes ago, Kpuff said:

Xrp settles faster than anything on the planet. There is barely any volatility whatsoever

I don't disagree with this. Hence why I believe XRP is the best digital asset. I just wanted to know the semantics of the process. I'm still learning and not an expert in this field. 

 

15 minutes ago, Trickery said:

The exact same problem already exists in the FX markets and the way it is minimised is through competition between market makers i.e whoever has the tightest spreads gets the customers.

Ah! That's right. Thank you for pointing this out. 

 

17 minutes ago, lll_lll said:

Big money transfers like $100 Million will not be done in the exchanges. It will be done OTC. Market makers take the cut both on buy and sell end. 

Thanks for reminding me, and clarifying this. 

Link to comment
Share on other sites

27 minutes ago, KingSolomon said:

Settlement asset with slight lag. I don't see why a bank would not settle this on anything but futures market. I'm not sure i follow re: credit risk. 

On a 100M transfer .05% variance is 500k. If you are not comfortable seeing this as a loss, then how about a gain?  Who gets to keep the extra money? Split?

If this is a noob question, please, someone kindly refer to source/link that explains this. Thanks much!!!

The forum gets a lot of people showing up asking these types of questions - most of them are, to be kind, "insincere" - and it was also hard to calibrate your understanding based upon the (initially simple, but now edited and quite a bit more complex) question.  Without spending so much time on this that I feel like I need to send you a bill, I'll provide you some catch-up info.

https://www.xrpchat.com/topic/5280-valuation-models-xrp-the-digital-currency-vs-ripple-the-company/?tab=comments#comment-50182

https://medium.com/@ikarosm/global-cash-management-with-crypto-assets-and-xrp-7e58b8c879e6

https://medium.com/@ikarosm/ripple-and-xrp-for-the-corporate-treasurer-6165da8b1475

Now, here's a more advanced hedging discussion that may be of interest to you - it's long, but deep:  https://twitter.com/tenitoshi/status/1039705048849113090

Hope that helps.

 

Link to comment
Share on other sites

11 minutes ago, NightJanitor said:

The forum gets a lot of people showing up asking these types of questions - most of them are, to be kind, "insincere" - and it was also hard to calibrate your understanding based upon the (initially simple, but now edited and quite a bit more complex) question.  Without spending so much time on this that I feel like I need to send you a bill, I'll provide you some catch-up info.

https://www.xrpchat.com/topic/5280-valuation-models-xrp-the-digital-currency-vs-ripple-the-company/?tab=comments#comment-50182

https://medium.com/@ikarosm/global-cash-management-with-crypto-assets-and-xrp-7e58b8c879e6

https://medium.com/@ikarosm/ripple-and-xrp-for-the-corporate-treasurer-6165da8b1475

Now, here's a more advanced hedging discussion that may be of interest to you - it's long, but deep:  https://twitter.com/tenitoshi/status/1039705048849113090

Hope that helps.

 

Thank you for understanding. At first, i didn't understand how "FUDiness" could be misconstrued from the opening questions, but now i do. Thanks everyone for clarifying. 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.