Answer: About the patent, Let's talk

[AlkalineHume]

14 hours ago, Pablo said:

Hello friend! So before I make any comments about your very perceptive post, may I ask: patent examiner or attorney?  

Neither  But I am an inventor on a handful of patents and have been deeply involved in crafting claimsets with patent attorneys.  So I'm translating from my second language rather than my native tongue here.  I may miss some idioms, but the gist will be right  

 

17 hours ago, BobWay said:

Find the right name for this, based on prior discussions, and I think it will snap into place for you.

Understanding the threshold adds clarity too.

Nice analysis!

Thanks for the signpost!  That was definitely the most tentative of my replacements.  I'll have to go back and sort it out when I get time, unless someone else gets to it first.

Edited March 27, 2019 by AlkalineHume

[ObeyTheWafflehouse]

15 hours ago, ObeyTheWafflehouse said:

"In economics, the Jevons paradox occurs when technological progress or government policy increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises due to increasing demand."

I think we may have found how this could apply a net upward pressure on XRP. I will try to do some digging on the economics behind this. 

In the law of demand and supply, there is an inverse relationship between demand and supply versus price. As supply increases, demand decreases, prices decrease and as supply decreases, demand increase, prices increase. Simple. 

Let's say Ripple wanted to set up liquidity pools of XRP. Unless there is a fancy way, Ripple will have to source the XRP from their current holdings to supply these pools. This will dilute the market and put downward pressure on XRP's price, initially. 

However, if Jevons paradox stands true for XRP and XRP is the most efficient resource to source liquidity (or act as a bridge currency), "the rate of consumption of that resource rises due to increasing demand." Higher the demand, the higher the price, but the higher the price, the less XRP needs to be used per transaction . Thus we are caught in the continuous cycle. The price of XRP will be proportionate to the demand. 

Although we should eventually breakout of this cycle and encounter resource scarcity categorized under demand-induced. Demand-induced "happens when the demand of the resource increases and the supply stays the same." 

People will always search for the cheapest and most efficiency resource available. My take is Ripple is already starting to build this liquidity pool network by pairing XRP with as many currencies as possible and partnering with trading firms. If Ripple can "kick start" the xRapid volume, this should be enough to organically grow volume thus putting a net upward pressure on XRP's price. 

Going back to Bob's question: "How can you give something away for free but increase the price?" I'm not exact sure how these pools are going to be set up (at exchanges or independently), but from my perspective, once you see Ripple "giving away" XRP it could be safe to assume these pools somewhat in the final stages of being completed. Maybe someone else could elaborate little more on this. 

[Guest]

2 hours ago, ObeyTheWafflehouse said:

In the law of demand and supply, there is an inverse relationship between demand and supply versus price. As supply increases, demand decreases, prices decrease and as supply decreases, demand increase, prices increase. Simple. 

Just being nit picky but that isn’t quite right...    as Supply increases it doesn’t decrease demand...  it simply meets it more easily resulting in a lower price.  And visa versa.

Just for exactness...   it’s not that I disagree with your post.  

[ObeyTheWafflehouse]

44 minutes ago, Tinyaccount said:

 as Supply increases it doesn’t decrease demand

Correct. A little backwards as I said. Demand and price will set the supply of a particular good as shown on this demand curve, but where things get interesting is when supply remains constant or unchanged. 

[Babelly]

Impressed with the content in this thread so thank you to whose who contributed.  After i finished my XrpChat visit, I headed over to twitter to browse XRP news as i normally do.  Talk about night and day.  Left twitter within 5 seconds and now I'm making this comment.  Thank god for this forum, certainly helps me HODL thru the bear market.

[Dario_o]

9 hours ago, ObeyTheWafflehouse said:

Going back to Bob's question: "How can you give something away for free but increase the price?" I'm not exact sure how these pools are going to be set up (at exchanges or independently), but from my perspective, once you see Ripple "giving away" XRP it could be safe to assume these pools somewhat in the final stages of being completed. Maybe someone else could elaborate little more on this. 

 

Bob already stated that Ripple is not going to give away XRP for free

 

 

[Guest]

9 hours ago, Dario_o said:

 

Bob already stated that Ripple is not going to give away XRP for free

 

 

They actually did already. A long time ago. Before Stellar and airdrops.

[richxrp]

3 hours ago, 7Bs said:

They actually did already. A long time ago. Before Stellar and airdrops.

If you mean world community grid, that was not free. You had to loan your compute cycles to solve problems for research. I know because I used my mac which in the process heated up a lot when all 4 cpu's were going.. Probably shortened the life of my mac and had to get apple to repair it a couple of years later..

https://www.xrpchat.com/topic/22929-donate-idle-cpu-time-to-the-world-community-grid-and-help-cure-cancer-aids-ebola-zika-or-tuberculosis/

Edited March 28, 2019 by richxrp
update

[Guest]

32 minutes ago, richxrp said:

If you mean world community grid, that was not free. You had to loan your compute cycles to solve problems for research. I know because I used my mac which in the process heated up a lot when all 4 cpu's were going.. Probably shortened the life of my mac and had to get apple to repair it a couple of years later..

https://www.xrpchat.com/topic/22929-donate-idle-cpu-time-to-the-world-community-grid-and-help-cure-cancer-aids-ebola-zika-or-tuberculosis/

I was referring to the Ripple part/top part; I thought there was a 1K giveaway at one point. I don't mean to clutter this thread.

[ObeyTheWafflehouse]

14 hours ago, Dario_o said:

Bob already stated that Ripple is not going to give away XRP for free

I was referring to this

On 3/10/2019 at 5:29 AM, BobWay said:

It's conventional wisdom that the one thing you can't do by giving away an asset like XRP--is make its price go up. 

Except one day, a while back, Stefan proposed a concept in which it might... 

I was quite reticent to believe it. It seemed intuitively impossible, much like you are thinking now. So I sat down to analyze it. And analyze it. And analyze it... And in the end I concluded his exact proposal was wrong. It was likely to put downward pressure on the prices of XRP.

But, Stefan wasn't very wrong. In fact, using his proposal as a starting place, I tweaked the parameters and intermediate goals and came up with a mechanism that I'm completely convinced will work. It leads to a net upward pressure on the price of XRP...

..and Ripple and I received a patent for it.

Now I don't speak for the company so I can't say if they'll ever deploy the system. I can't say they won't either. But I can say that I know at least one method exists that defies the above conventional wisdom.

Economically speaking, how can you implement a system that "gives away XRP", but yet sustain an upward pressure on XRP's price? What does that system look like and can it sustain a driving force of the upward pressure in the longevity? 

I'm by no means a economist, but knowing what the system might look like provides certainty as an investor. 

[Guest]

3 hours ago, ObeyTheWafflehouse said:

I was referring to this

Economically speaking, how can you implement a system that "gives away XRP", but yet sustain an upward pressure on XRP's price? What does that system look like and can it sustain a driving force of the upward pressure in the longevity? 

I'm by no means a economist, but knowing what the system might look like provides certainty as an investor. 

Fresh water is out by 2030-2039? Desalination is too costly. If XRP becomes the new water, the price of XRP/or water as a commodity doesn't matter. XRP will be able to find new ways that make desalination affordable. It's a resource.

Edited March 29, 2019 by Guest

[BehindtheLedger]

It sounds like a system for providing just-in-time xrp liquidity to any corridor, so as to ensure xrp is the cheapest payment path (i.e. just below the "threshold" cost). 

That way, even though you're diluting the xrp supply, you more than make up for it in payment demand, which makes xrp more valuable, which eventually increases the price.

It sounds a bit like the Federal Reserve's open market operations, where the Fed injects & removes liquidity to keep short term interest rates at a desired level. To be max effective, might it need to work in reverse as well? 

https://www.stlouisfed.org/in-plain-english/a-closer-look-at-open-market-operations

 

 

[BobWay]

17 hours ago, BehindtheLedger said:

It sounds like a system for providing just-in-time xrp liquidity to any corridor, so as to ensure xrp is the cheapest payment path (i.e. just below the "threshold" cost). 

That way, even though you're diluting the xrp supply, you more than make up for it in payment demand, which makes xrp more valuable, which eventually increases the price.

It sounds a bit like the Federal Reserve's open market operations, where the Fed injects & removes liquidity to keep short term interest rates at a desired level. To be max effective, might it need to work in reverse as well? 

https://www.stlouisfed.org/in-plain-english/a-closer-look-at-open-market-operations

This is a very good way of thinking about it. The analogy isn't perfect but first two sentences are spot on.

Most people are familiar with speculators, but not really familiar with market makers.

If you ask a speculator what will drive up the market price, they'll often tell you, "More people who want to buy and hold XRP long term." It is because increasing buying volume without increasing selling volume exhausted the lowest price offers first, then must take higher and higher offers to satisfy demand.

But market makers don't seem like long term HODLers to most speculators. This is because XRP market makers are constantly buying and selling XRP at the same time. So what could seem less HODL than having continuous sequence of SELL order in the market at all time? But it turns out that only half understands the situation.

In order to place a SELL order in the market, you must first be HODLing the XRP you're wanting to sell. And if you want to keep sell orders in the market continuously, forever, you must also be HODLing XRP continually, forever. So market makers continuously BUY back whatever XRP they sell, as soon as possible. This gives them the XRP inventory they need to sell again on the next payment.  So you can visualize an XRP/USD market maker who deploys half of their capital in XRP and the other half in USD. Then they work to continually keep that value balance equal. Of course they also work to keep their total investment continually growing as well.

A MM's investment growth comes from "transaction fees" paid by the senders of a payment that ripples through XRP as a bridge. It really isn't an explicit "fee". It is the difference between the market spread prices (highest bid vs lowest offer). In effect, a MM is always selling XRP for a price slightly higher than the price they buy the XRP back for. When doing this, the MM's profit scales with payment volume rather than with XRP price change.

So if a MM is profitable trading against back and forth payments on a given corridor (XRP/USD) they want to keep trading that corridor, forever. And to do that, then need to keep HODLing XRP forever. So how can you increase the price of XRP?  Well, of course, attract more market makers to the corridor and system. They can't trade a corridor until AFTER they purchase their stake of XRP. And once they have purchased that XRP and are profitably making the market, they are in effect long term HODLers.

Note, a MM's profit does not scale with their investment. It scales with increasing payment volume through their investment. So doubling payment volume can support twice as many MM at the same ROI. Of course this requires cumulatively doubling the MM's XRP stake as well.

All utility comes for satisfying the NEED of someone to send a payment. It is this NEED that encourages them to pay slightly higher fees (Market Order) than those who merely WANT to make a payment but have more time to wait (Limit Order).

But of course the whole strategy is worthless, if the XRP bridge currency path costs more end-to-end than alternative pathways. If we presume payment routing algorithms always take the lowest cost path (for Alice), then end-to-end cost becomes the switch that determines if the direct fiat/fiat market makers turn a profit, or if the fiat/XRP bridge market makers turn a profit.

Edited March 29, 2019 by BobWay

[BehindtheLedger]

2 hours ago, BobWay said:

Most people are familiar with speculators, but not really familiar with market makers.

Thank you for the awesome explanation. I’m going to link my twitter to it, as it should be required reading! Thanks Bob 

[stuartXRP]

8 hours ago, BobWay said:

In effect, a MM is always selling XRP for a price slightly higher than the price they buy the XRP back for. When doing this, the MM's profit scales with payment volume rather than with XRP price change.

So by using a compound increase Calculator, for example if a market maker starts with 1 XRP for $0.3000 with a increase of 0.01% over 45,000 payments, 1 XRP would equal $26.99. Then as price gets higher MM percentage of "selling XRP for a price slightly higher than the price they buy the XRP back for" decrease as need for XRP cheapest path?