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Value of using ripple over other currency on the ripple network.

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In addition to freeing up tons of bank money sitting (wasting away) in nostro accounts, xrp can serve as a bridge currency between a pair of fiats, for example, because it may be the cheapest way to convert one fiat to the other (basically because each fiat will have a fairly liquid (we hope) trade going on between it and xrp, and there may not be much liquidity between the two fiat pairs so xrp is the intermediary currency - a go between - as the overall spreads are lower).   

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Okay @Duke67. I think I got it. So ripple would be the go between dollars>ripple>Euros. 

So how does ripple use make the price rise. If a bank buys $100 worth of ripple to send overseas, and it is sold five seconds later for Euros, how would this quick buy and sell increase the price, or even give ripple value?

It seems like an envelope that someone uses to send money. Once the money is sent, the envelope is thrown out.

Please tell me where I'm going worng?

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@Alluvial, I see how it is useful. I am not sure how it's use will give ripple enough value for me to retain my ripple long term.

It seems to me like a cheap way to send money and that's all. As if banks agree with each other to use this system, but what give me the hope that it will make it increase in value?

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2 minutes ago, Ctrl-Z said:

Okay @Duke67. I think I got it. So ripple would be the go between dollars>ripple>Euros. 

So how does ripple use make the price rise. If a bank buys $100 worth of ripple to send overseas, and it is sold five seconds later for Euros, how would this quick buy and sell increase the price, or even give ripple value?

It seems like an envelope that someone uses to send money. Once the money is sent, the envelope is thrown out.

Please tell me where I'm going worng?

They are not targeting USD - EUR  because it's already efficient. They are focusing on non-popular pairs.

Also, for a lot of big institutions, it'll be worthwhile to hold some amount of XRP in reserve just in case they need to convert a lot of money to different currencies quickly.

When more companies buy XRP and hold some in reserve, demand will increase and price goes up as a result.

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5 minutes ago, Ctrl-Z said:

@Alluvial, I see how it is useful. I am not sure how it's use will give ripple enough value for me to retain my ripple long term.

It seems to me like a cheap way to send money and that's all. As if banks agree with each other to use this system, but what give me the hope that it will make it increase in value?

Also, XRP will be a store of value in and of itself, like bitcoin is now.   XRP provides a lot of utility - much more than bitcoin.  Bitcoin just happened to be first.  XRPs are limited in number, and transaction time is 3.7 seconds whereas bitcoin's average is around 10 minutes, and sometimes over an hour.   If you like bitcoin, what is it exactly that you like about it?  

XRP - I believe (and hope and pray) - will be the world's global digital currency.  After banks adopt the Ripple protocol, merchants will be next to use it as a means to accept payment.  Soon XRP will be so ubiquitous that it can't help but to be the top dog.  So maybe hold on to some?

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I still don't get why XRP would be valued above another cryptocurrency like BTC. Can't the banks hold BTC or ETH in reserve and use that over the Ripple network instead of XRP? What's the specific advantage of XRP?

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This is an excellent long read on why Ripple has value... for those that just want the Ripple section... skip to second last section. Ripple will be a temporary on-boarding service for Bitcoin... a pipe from banking fiat to Bitcoin currency.

The banks will do this in support of Bitcoin because of the 'fees' to be paid. Asia will do this to dump their USD fiat.

The author does not consider the case in which the banks survive. If they do survive I would bet that Ripple could become a defector back bone to a global currency.

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9 hours ago, Max Entropy said:

This is an excellent long read on why Ripple has value

"But wait, there's more"  to quote some cheesy television ads of the past.  I'm looking for the link you mention, @Max Entropy.  Have I not had enough coffee this morning to see where you've linked it?  I am curious. Thank you.

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11 hours ago, Trippy said:

I still don't get why XRP would be valued above another cryptocurrency like BTC. Can't the banks hold BTC or ETH in reserve and use that over the Ripple network instead of XRP? What's the specific advantage of XRP?

XRP has no counter-party risk.  :yess:

Anything except XRP entails a counter-party risk.  They would need to trust the issuing organization to redeem those IOUs for ETH or BTC.  There is no trust needed for XRP.... it only exists in the network, whereas an IOU exists outside of it - an IOU is only a representational asset while on the XCL. 

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17 hours ago, Hodor said:

XRP has no counter-party risk.  :yess:

Anything except XRP entails a counter-party risk.  They would need to trust the issuing organization to redeem those IOUs for ETH or BTC.  There is no trust needed for XRP.... it only exists in the network, whereas an IOU exists outside of it - an IOU is only a representational asset while on the XCL. 

Now I get the picture. Thanks!

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1 hour ago, JoelKatz said:

One problem is on the receiving end. Say a bank receives a million dollar payment in the form of BTC or ETH and then the recipient wants to make an outbound payment on a conventional domestic payment rail. What does the bank do? Sell BTC or ETH? How?

Ripple's XRP strategy includes incentivizing liquidity pools between XRP and fiat already at (or near) the receiving bank. That means the receiving bank is paid in fiat already at (or near) that bank. So the payment is instantly settled, rather than leaving them a pile of a token that they then have to sell or settle somehow.

Now it's true that somebody could build such liquidity pools with BTC or ETH. But who would? Ripple is uniquely positioned to have both the means and the incentive to do that. We have a unique revenue model of the appreciation of the value of XRP, much of which we can capture, combined with a huge war chest of XRP (worth billions at the current price) that we can use to incentivize.

It's not that nobody else could conceivably do it. It's that we're doing it and nobody else is, or even really has reason to. Why should banks do it at their own expense when we're doing it already? Unless you think some bank consortium is going to launch a counterparty-less, floating value token and try to profit from its appreciation in value (as we are) in which case we're way ahead of them in many ways.

I would also add that XRP has been specifically designed and optimized for this purpose. A payment that delivered fiat in this way would need something like ILP to coordinate across ledgers. We have escrow and payment channels for optimum ILP operation with XRP. Our transactions are faster, cheaper, more predictable, and more scalable. So we think we can win for this use case on a level playing field.

Thank you @JoelKatz. This is the clearest clarification I've ever seen on this question. This should be cited elsewhere and will stop all the questions on the role and superiority of XRP.

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