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Does Novogratz have a point?


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Longtime XRP investor here and bullish on XRP. Nevertheless I think Novogratz raises a fair point. 

"Ripple the company owns 60 billion of the coins, of the XRP,” Novogratz began. “That’s a lot of it.”

“When I’m buying a stock, if I know [someone’s] selling $10 billion-worth of it at some price, it makes me less excited to buy the stock,”

“It did underperform immensely last year,” he told the audience. “I think it will underperform immensely again this year and it’s just because of the supply.”

 

This is not about comparing XRP to shares (because they are not). But about the sheer amount of XRP Ripple is holding. 

I was part of the 'sword of damocles' discussions before the Escrow thing and although the Escrow construction mitigates part of the issue, for all practical purposes the hypothetical ability to 'dump' 1 billion XRP on the market each month is still looming above the market. 

I know the argument about how this is not in Ripples interest but would rather see an automatic release mechanism tied to an x% of growth. 

Growth is decreasing below the set percentage then release of XRP is decreasing (maybe even buying up XRP). And vice versa. 

Curious to hear what you think. 

 

 

Edited by ixarepe
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A decentralized digital asset can only work if the asset is distributed. XRP has no mining process to do that distribution, and for a very good reason: it is inefficient and wasteful. So it has t

He could very well be right, but it doesn't matter. This is a long term game. Every million $ of XRP sold by Ripple helps to build the ecosystem, whereas every million $ of minted and sold Bitcoin by

It may be more difficult to distribute $6bn when nobody uses the asset, than distributing $600bn when it is widely adopted. Anyway, distribution of XRP is far less than distribution of BTC, and t

The current supply Ripple and 'friends' are puring into the markets is less than what ETH and BTC miners are dumping into the market.

Do you know how many Bitcoins are mined everyday? 144 blocks per day are mined on average, and there are 12.5 bitcoins per block. 144 x 12.5 is 1,800, so that's the average amount of new bitcoins mined per day.

So that makes 1800x $10 000= $18 000 000 or 18 million buck per day.

Now multiply this 18mil X 365 days = $6.6 billion dollars per year or this is 3.7% compared to the current market cap of 177billion.

I am calculating it by using the dollar value so you can see how much money it needs to be poored in Bitcoin yeach year just to keep the price stable.

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40 minutes ago, BAX said:

The current supply Ripple and 'friends' are puring into the markets is less than what ETH and BTC miners are dumping into the market.

Do you know how many Bitcoins are mined everyday? 144 blocks per day are mined on average, and there are 12.5 bitcoins per block. 144 x 12.5 is 1,800, so that's the average amount of new bitcoins mined per day.

So that makes 1800x $10 000= $18 000 000 or 18 million buck per day.

Now multiply this 18mil X 365 days = $6.6 billion dollars per year or this is 3.7% compared to the current market cap of 177billion.

I am calculating it by using the dollar value so you can see how much money it needs to be poored in Bitcoin yeach year just to keep the price stable.

True, but miners will only be able to mine & sell 15% of total bitcoin supply, whereas approx 60% of XRP is not yet distributed. Investors/speculators might find this last characteristic more disturbing than the current short-term price pressure from miners. But I'm urging everyone to view this as a long-term game:)

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21 minutes ago, DutchBeetle said:

True, but miners will only be able to mine & sell 15% of total bitcoin supply, whereas approx 60% of XRP is not yet distributed. Investors/speculators might find this last characteristic more disturbing than the current short-term price pressure from miners. But I'm urging everyone to view this as a long-term game:)

Of course its a long term game, but after all I am investing becuase of the tech, XRP is a lot more supirior than BTC in every aspect so that 50% that are not distributet doesn't mean anything. This didn't stop the price of XRP to reach $3.7 right.

Also look at Oil and how much Saudi has and how much is distributing every single day.

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Yes, Novogratz is no fool - he has a point. Whoever designed XRP probably isn't an economics genius (imo). I am not an economics genius either, but I do know a fair bit.  I'm familiar with the arguments on both sides, but personally think that Ripple holds a *ridiculous* amount of XRP which I think will be off-putting to some of its more serious potential partnerships. That said, people are greedy and speculation can still drive XRP higher than its previous ATH, I think.

@DutchBeetle Whilst it can be argued that the sold BTC capital "flows out of BTC", this is what incentivises miners to process transactions and secure the network. It further incentivises competition between miners and their upstream suppliers leading to a lean and robust network infrastructure. It's a neatly capitalist setup. This is not a bad thing.

Edited by JA8
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24 minutes ago, Skippy said:

What if 50B of XRP was held by a hypothetical "decentralized" entity which whole purpose was to invest the capital from XRP sales back to the XRP ecosystem?

Now how much does Ripple differ from this?

I assume (perhaps I'm wrong?) that the 50bn XRP are on Ripple's balance sheet. If they aren't, then that does change things a bit I think.

Edited by JA8
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32 minutes ago, Skippy said:

What if 50B of XRP was held by a hypothetical "decentralized" entity which whole purpose was to invest the capital from XRP sales back to the XRP ecosystem?

Now how much does Ripple differ from this?

Two very big "if's"...but a great way to frame it. I've been struggling with the OP issue since i bought (i'm long term HODL until i'm convinced otherwise, still early in the game IMO), but what you've posited is what i hope ultimately happens (and maybe it's in effect already).

Edited by xrpmeplease
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4 minutes ago, lucky said:

A decentralized digital asset can only work if the asset is distributed.

XRP has no mining process to do that distribution, and for a very good reason: it is inefficient and wasteful. So it has to be distributed by preallocation ("pre-mined"). There is NO other way.

The geniuses that created XRP ledger have created a company to do the distribution. All the incentives are aligned: company needs the asset to be distributed (used), and company also wants the asset to be as valuable as possible.

To then say: "the company holds a ridiculous amount of XRP" just means you don't understand the whole idea.

THERE IS NO BETTER WAY.

 

I think I do understand the whole idea. 

It's easier to distribute $6bn than $600bn. Distribution of such a large quantity of XRP could be very difficult as the price rises, and may in fact hold it back from rising very significantly (as per Novogratz's comments).

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18 minutes ago, JA8 said:

I think I do understand the whole idea. 

It's easier to distribute $6bn than $600bn. Distribution of such a large quantity of XRP could be very difficult as the price rises, and may in fact hold it back from rising very significantly (as per Novogratz's comments).

It may be more difficult to distribute $6bn when nobody uses the asset, than distributing $600bn when it is widely adopted.

Anyway, distribution of XRP is far less than distribution of BTC, and the difference is that revenue on BTC distribution is wasted on energy and asics, revenue of XRP distribution is used to pay salaries.

Novogratz is either a fool or has an agenda to push the "halving will push BTC price up" narrative. To counterweight the other possible (and not unlikely) outcome of the halving: chain death.

I think he is a fool.

Edited by lucky
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34 minutes ago, lucky said:

The geniuses that created XRP ledger have created a company to do the distribution. All the incentives are aligned: company needs the asset to be distributed (used), and company also wants the asset to be as valuable as possible.

To then say: "the company holds a ridiculous amount of XRP" just means you don't understand the whole idea.

THERE IS NO BETTER WAY.

Producing goods on stock before there’s nearly enough demand ( and with the uncertainty that there ever will be) isn’t a very “ Lean” way to do business.  Push instead of Pull.  Maybe there was no better way, but this comes with high risks and has led many enterprises to bankruptcy. 

Edited by Ripple-Stiltskin
And that risk is at us......not Ripple imo.
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9 minutes ago, lucky said:

It may be more difficult to distribute $6bn when nobody uses the asset, than distributing $600bn when it is widely adopted.

Anyway, distribution of XRP is far less than distribution of BTC, and the difference is that revenue on BTC distribution is wasted on energy and asics, revenue of XRP distribution is used to pay salaries.

Novogratz is either a fool or has an agenda to push the "halving will push BTC price up" narrative. To counterweight the other possible (and not unlikely) outcome of the halving: chain death.

I think he is a fool.

Except you got it the other way around, no one is using XRP and hence has such low volume's when compared to BTC.

Edited by LetHerRip
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54 minutes ago, lucky said:

A decentralized digital asset can only work if the asset is distributed.

XRP has no mining process to do that distribution, and for a very good reason: it is inefficient and wasteful. So it has to be distributed by preallocation ("pre-mined"). There is NO other way.

The geniuses that created XRP ledger have created a company to do the distribution. All the incentives are aligned: company needs the asset to be distributed (used), and company also wants the asset to be as valuable as possible.

To then say: "the company holds a ridiculous amount of XRP" just means you don't understand the whole idea.

THERE IS NO BETTER WAY.

 

I think you are correct. However, there are details which matter a lot:

How are the funds distributed? (Are they just given away or sold for market price)

At which pace are the funds distributed? I think for a healthy market the majority of XRP should be distributed as early as possible (50% already which is good!). If the company ends up holding too much when the network gets big, it's an issue which can stagnate growth (perhaps). If they distribute too much too early, they will "suppress the price" and possibly destroy the whole market. 

I think Ripple is doing a great job. I hope they were more public about where they use the money from XRP sales. 

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