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amulecregg

I found a David Schwartz's very interesting old comment

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"We have several different strategies that could allow XRP to be an intermediary in bank-to-bank payments. The best ones require it to be possible to buy and sell significant value in XRP without significantly moving the price. We can do a lot more a lot faster with XRP at $0.25 than we could have with XRP at $0.006, but more liquidity and higher trade volumes would make things even better for us.

They key thing to understand is that having the banks use XRP directly may not be the best model. Think of it from the standpoint of the receiving bank -- one of their customers gets a million dollar payments and they wind up with a million dollars worth of XRP. Now, what are they supposed to do if that customer wants to make an outbound dollar payment on a conventional, domestic rail? They'd either need another pile of dollars to back their XRP, an efficient way to convert that much XRP immediately into dollars that are already accessible on the domestic rail, or they'd need to make their customers wait before the payment settled (as they convert the XRP to fiat).

The ways you can solve that problem depend on several factors. One of them is how liquid XRP is, which tends to correlate with the price. Another is how much it can cost and still be profitable, which depends largely on how inefficient the conventional way to make the payment was.

These kinds of factors go into our decision of which payments and payment corridors to target first."

@sjoelkatz

I just think the comment by @JoelKatz is very interesting, specially the first paragraph—considering the recent change of XRP/USD price.

Edited by amulecregg

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David also said he wouldn't expect xrp to reach more than $20, which I think is a fair price. It's approx a 100x increase from where we are now. Personally I think it will eventually go a lot higher than that. 

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2 hours ago, cheddar said:

If the tech goes mainstream it will probably be replaced with something more regulated.

It is the most regulated framework out there already - there isn't any third party with a competing regulated asset to XRP, and if a bank tries creating their own asset they are still issuing IOU's rather than liquid assets, as they would transacting with XRP. 

Edited by M-X

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9 minutes ago, M-X said:

It is the most regulated framework out there already - there's isn't any third party with a competing asset to XRP, and if a bank tries creating their own asset they are still issuing IOU's rather than liquid assets, as they would transacting with XRP. 

Good comment. I'll take that.

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I doubt banks would make their own coin, at least for international transfers.

My understanding is the market is what allows the payments to be near instant.

Example: Bank A wants to send 1 million to Bank B. Bank A either sends their own stored XRP or buys 1 million XRP from a local market using Bank A's local currency. SO it would buy it from regular traders like us. It would then send that 1 million worth of XRP to Bank B. Bank B could either hold onto those XRP or if they wanted to the money they would sell those XRP at a local exchange and get local fiat. Bank A uses its local fiat and sends xrp to Bank B who sells it for their local fiat. Without buyers and sellers the system wouldn't work.

I don't see there being near enough demand if each bank has it owns token. More coins would decrease liquidity and make the whole system less efficient which in turn would make XRP the bridge asset as it would provide more liquidity and thus better rates.

Am I wrong in my thinking here?

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