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Bagheera

The reason why XRP will be adopted

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XRP is the native currency of the Ripple network that only exists within the Ripple system. Not dependent on any third party for redemption, XRP is the only currency in the Ripple network that does not entail counterparty risk and it is the only native digital asset on the Ripple network. Any other digital asset (non-XRP) existing on the Ripple network is a debt instrument (a liability) and exists in the form of a balance which entails counterparty risk. Eliminating this risk is why XRP will be adopted over any other digital asset.

Are you "from the industry?"  (i.e., banking) 

The reason I ask is that this is probably the most clear explanation of counterparty vs. no-counterparty risk I've seen. 

If only I'd read this paragraph when I first started learning about XRP, it would have saved me a LOT of time!  :yes3:

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36 minutes ago, Bagheera said:

XRP is the native currency of the Ripple network that only exists within the Ripple system. Not dependent on any third party for redemption, XRP is the only currency in the Ripple network that does not entail counterparty risk and it is the only native digital asset on the Ripple network. Any other digital asset (non-XRP) existing on the Ripple network is a debt instrument (a liability) and exists in the form of a balance which entails counterparty risk. Eliminating this risk is why XRP will be adopted over any other digital asset.

A counterparty risk, also known as a default risk, is a risk that a counterparty will not pay as obligated. Financial institutions or other transaction counterparties may hedge, take out credit insurance or, require the posting of collateral. Offsetting counterparty risk is not always possible because of temporary liquidity issues. Counterparty risk increases due to positively correlated risk factors. Accounting for correlation between risk factors and counterparty default in risk management methodology is not trivial. XRP removes both the counterparty risk and the associated costs 100%.

The elimination of counterparty risk IS the reason why XRP will in fact be adopted by everyone who uses the Ripple network. Notice how Ripple (the company) has been focused on implementing their solution globally in the banking sector and not focusing on the promotion of XRP. Why? Because they don't have to. XRP is to the Ripple network as plasma is to the blood in the human body. Focus your attention on Ripple's ability to implement quickly and broadly across the globe and that will translate into XRP strength and growth.

Disclosure: This information was compiled from secondary sources and summarized for simplicity.

 

I don't know what your saying, but i like it, im sold

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This is why I don't understand it when JoelKatz says it's possible XRP won't work out and Ripple will become a software company. How can that be possible if XRP is truly this good as a bridge? Wouldn't Ripple the software company eventually be eaten up by their own monster they created when another company creates its own version of XRP that either bypasses the banks altogether or the banks actually start using?

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Just now, XRPYoungSkyWalker said:

At what price do you think XRP will be at in 2 years or 3?

 

I am in Risk Management by profession. As such, I will leave the mathematical projections to the number crunching folks. However, XRP takes the risk out of the equation which translates into why XRP will be adopted.

 

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So in simplistic lamens terms, the transactions are not dependent on the liquidity or holdings of the sending/receiving parties?

Like for example, when Checks were widely used, the merchant would accept it, but it would take days for the funds to clear, and depending on the status of the funds in the the said checking account, the merchant will be paid, or get screwed over.

So, Ripple is taking on the risk and is acting as a guarantor for said transactions? hence why Ripple is aiming to sell XRP to these institutions to reduce the risk (or eliminate it all together)?

if that be the case, then I expect great gains from XRP.

Edited by wildbull1984

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Just now, Bagheera said:

You are correct. In traditional systems, counterparty risk exists because quick and successful transactions are dependent on the two-way liquidity which cannot exist without an implicit trust mechanism such as  insurance or collateral. This is why transactions take days and weeks as opposed to seconds. Think of it as eliminating risk while reducing time. To clarify, Ripple is not taking on the risk, XRP is eliminating the risk by its design--.e.i., not dependent on any third party for redemption.

 

 

 

Hence why there are billions of XRP that are pre-mined.
The more banking and financial institutions that come on board, the demand for XRP will rise so they can utilise the technology.
Very VERY smart cookies.

Let us hope that their marketing and management team do not have any major screw ups in the meantime.

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