Jump to content
Sign in to follow this  
joemurray27

Market Capitalization of XRP

Recommended Posts

Ok, I have been on this site for a few weeks now and I have been seeing a lot of people speculate on the value of XRP. Most talk about $5-$10, then there are some that talk $100's or $1,000's. My question is this, if Ripple is currently going after the SWIFT market, which transfers 5 trillion $'s per day (or $1,825 trillion per year) and lets say they get half - So that correlates to 2.5 trillion $'s per day or 912.5 trillion per year. How could you determine the market cap for this, ergo the XRP value? I was trying to put some numbers to the future value of XRP, in doing so, I had a few thoughts on things that would affect this.

1) The 100 billion XRP that will be in circulation eventually, this is quite large population when compared to BTC and other Coins.

2) The destruction of XRP with every transaction, this will have a inverse correlation to the value of XRP because as the # of XRP goes down, the value of XRP should go up. Less supply more demand.

3) The # of XRP actually in the hands of the banks and being circulated. This one is a biggie for me because I think the Banks will be the main source of value for XRP, once in full use. If every bank is competing over the # of XRP on their balance sheets to handle large amounts of transactions so they can be the "go to bank" for making low cost cross-boarder transfers, then won't that alone drive up the value of XRP? Not to mention other individuals will hold XRP, thereby reducing the overall supply for the banks to compete over?

When considering all of this does anyone have a way of explaining their "future XRP value" with some numbers and sources? Is it plausible, for XRP to become as high in value as BTC is now? How could you predict the future market cap? Is it as simple as taking the example of " What if XRP replaces SWIFT entirely"? Could you simply say $1,825,000,000,000,000 (yearly value) divided by 100,000,000,000 XRP = $18,250? I know this calculation is pretty juvenile, I'm a CPA, not a Financial Analyst so I'm curious of how the numbers work, how is the future cap calculated? 

Share this post


Link to post
Share on other sites

Will a new thread like this come up every few days? I guess it's fine and it means some people are interested, but come on... Take a couple of hours and read through the existing topics. This has been covered over and over again. And market cap means 0.

Share this post


Link to post
Share on other sites

Schwartz's post which was just linked above is probably the best guess so far.

There's been several posts over the past few months with some pretty good ideas on how the market cap could be valued. I think its nice to look at cold hard numbers and see some guesses at stuff but the truth is, as of now, the markets are irrational and don't follow any ones calculations.

The cryptomarkets are still young and no one has any idea how they should be valued. People all the time are saying that that bitcoin is too high, its going to crash. It can never reach parity with the US dollar, it cant pass silver, it cant pass the price of gold. it cant pass 100 B market cap. Why not? Crypto is a totally new asset class. You can throw out a lot of different numbers and make things look good on paper but theres nothing to pin the markets against.

None of the calculations will take into account investor frenzy or fear (Shwartz talked about a multiplier). FOMO. Irrational buying and dumping. Market manipulation. Ive seen good reasoning behind why the price will only be able to reach $2-10. Ive also seen good reasoning why it could go $1000+

 

Share this post


Link to post
Share on other sites
4 hours ago, bm32533476 said:

Will a new thread like this come up every few days? I guess it's fine and it means some people are interested, but come on... Take a couple of hours and read through the existing topics. This has been covered over and over again. And market cap means 0.

I am very sorry but I respectfully strongly disagree with market cap having no correlation to the anticipated price.  The wealth of the currency has everything to do with what it is capable of carrying. Its like a truck carrying a load, there are mathematics involved in what the truck could carry. Delivering currency is very similar in its basic nature.   

Share this post


Link to post
Share on other sites
5 hours ago, joemurray27 said:

Ok, I have been on this site for a few weeks now and I have been seeing a lot of people speculate on the value of XRP. Most talk about $5-$10, then there are some that talk $100's or $1,000's. My question is this, if Ripple is currently going after the SWIFT market, which transfers 5 trillion $'s per day (or $1,825 trillion per year) and lets say they get half - So that correlates to 2.5 trillion $'s per day or 912.5 trillion per year. How could you determine the market cap for this, ergo the XRP value? I was trying to put some numbers to the future value of XRP, in doing so, I had a few thoughts on things that would affect this.

1) The 100 billion XRP that will be in circulation eventually, this is quite large population when compared to BTC and other Coins.

2) The destruction of XRP with every transaction, this will have a inverse correlation to the value of XRP because as the # of XRP goes down, the value of XRP should go up. Less supply more demand.

3) The # of XRP actually in the hands of the banks and being circulated. This one is a biggie for me because I think the Banks will be the main source of value for XRP, once in full use. If every bank is competing over the # of XRP on their balance sheets to handle large amounts of transactions so they can be the "go to bank" for making low cost cross-boarder transfers, then won't that alone drive up the value of XRP? Not to mention other individuals will hold XRP, thereby reducing the overall supply for the banks to compete over?

When considering all of this does anyone have a way of explaining their "future XRP value" with some numbers and sources? Is it plausible, for XRP to become as high in value as BTC is now? How could you predict the future market cap? Is it as simple as taking the example of " What if XRP replaces SWIFT entirely"? Could you simply say $1,825,000,000,000,000 (yearly value) divided by 100,000,000,000 XRP = $18,250? I know this calculation is pretty juvenile, I'm a CPA, not a Financial Analyst so I'm curious of how the numbers work, how is the future cap calculated? 

Very good question.  Although keep in mind that your math is based off banks carrying and holding the full load of 1,825,000,000,000,000 at one time. These transactions will be conducted in short bursts, then liquidated into cash.  So the interval would not be in one load but many, therefore the load amount would be greatly reduced. Load reduction would reduce the price from 18,250 to at a minimum of a several hundred per coin. (Based off your math on swift volume, coin circulation, etc..  just hypothetically speaking). 

There are many other variables that could change all of this significantly which I do not want to get into in one single chat conversation but global market transactions will increase in frequency and size, plus other coins will surface that work with lenders who are not the central banks, not to mention peer to peer transfers will reduce the amount of transfers conducted by central banks (hence the "decentralized" theme), and the list goes on. Bottom line is we are all here early so we are all doing great by just being here and educating each other. 

Edited by CryptoCredit

Share this post


Link to post
Share on other sites
13 minutes ago, CryptoCredit said:

I am very sorry but I respectfully strongly disagree with market cap having no correlation to the anticipated price.  The wealth of the currency has everything to do with what it is capable of carrying. Its like a truck carrying a load, there are mathematics involved in what the truck could carry. Delivering currency is very similar in its basic nature.   

The market cap is just a number obtained by multiplying the current value and the number of coins in existance... As mentioned above, there is no way to determine the future cap for a new asset class that is entirely unpredictable and then use that number to calculate price.

You can't compare it to other assets, you can't really even compare it to other cryptos to be fair. Does the current market cap of XRP in USD reflect the amount of USD invested in this currency? No. Does it show the amount in USD that you would get if you sell all XRP in existance? No, because there is no liquidity for that and the market would crash whenever the sell off begins. So what does market cap show that would help you asses the future state of XRP or its price?

Share this post


Link to post
Share on other sites
1 hour ago, bm32533476 said:

The market cap is just a number obtained by multiplying the current value and the number of coins in existance... As mentioned above, there is no way to determine the future cap for a new asset class that is entirely unpredictable and then use that number to calculate price.

You can't compare it to other assets, you can't really even compare it to other cryptos to be fair. Does the current market cap of XRP in USD reflect the amount of USD invested in this currency? No. Does it show the amount in USD that you would get if you sell all XRP in existance? No, because there is no liquidity for that and the market would crash whenever the sell off begins. So what does market cap show that would help you asses the future state of XRP or its price?

Determining the future off of the market cap alone is not possible. Using the Market Cap, along with other financial indicators could help you gauge future prices. To say that coin market cap has nothing to do with anything would be very misleading in a stand alone statement. such as  "coin market cap means 0" as you stated earlier. If it meant "0" that indicator would not exist, it serves a purpose. I understand what your saying, but I would not want to confuse fresh minds that are here to think that coin market cap is useless. I believe what you mean is that there are plenty of other variables to worry about when discussing something of this magnitude. If that is what your implying then I agree... 

Edited by CryptoCredit

Share this post


Link to post
Share on other sites

The market cap is a result of the current price, I do find it useless in cryptoworld and I understand why people disagree with this. But whether you try to predict price or market cap is the same for XRP, you're just trying to guess the market dynamics at a time in the future and it is basically impossible to do so with XRP or any other crypto right now.

Share this post


Link to post
Share on other sites

@joemurray27 I've had a chance to think through the thoughts on Market Cap and this i believe is the best way to present what market cap would mean for a coin.

Market-Cap for Crypto currencies would represent the level of trust as well as how widely accepted the currency has with the community.

Eg. USD is has the largest supply as it is supported by the US which is currently the world largest economy.

As much as we all believe in the utility of XRP its is still part of an asset class considered to be highly speculative, even Bitcoin which is quoted as being digital gold is in the same category and that is why there is such a high possibility of making 3000% returns.

I know Brad Garlinghouse compared Ripple with Amazon and how it revolutionized the book industry however i would compare it more to a company like Tesla, massive potential to revolutionize the industry but currently making loses year on year but we expect it to turn around in the future.

 

 

Edited by Dan1

Share this post


Link to post
Share on other sites
On 18.9.2017 at 9:53 PM, CryptoCredit said:

I am very sorry but I respectfully strongly disagree with market cap having no correlation to the anticipated price.  The wealth of the currency has everything to do with what it is capable of carrying. Its like a truck carrying a load, there are mathematics involved in what the truck could carry. Delivering currency is very similar in its basic nature.   

I don't get your point.

What's "wealth of the currency"? Like, buying power?

Your truck example is right for a truck, but not applicable in a world of printed money propping up prices of already existing goods.

Share this post


Link to post
Share on other sites
On 18.9.2017 at 11:21 PM, CryptoCredit said:

If it meant "0" that indicator would not exist, it serves a purpose.

So, allow me to turn your statement around:

What purpose DOES it serve?

Market cap = last transaction price multiplied by total available assets. I really don't know what else than a mental masturbation this number is, knowing that:

a) you will not be able to offload the total number of available assets at this price (yet we used total number to get there)

b ) you have no guarantee that the next transaction will happen at this price

c) it has no predictive value (OK, nothing has in the financial world)

d) it's not of comparison value because it does not reflect AT ALL the volume structure behind the/ inside the orderbook

....

You see, it's quite a limited number...

Share this post


Link to post
Share on other sites
Sign in to follow this  

×
×
  • Create New...