XRP – why it needs a high price


hello everyone
let’s get started
first off I have no financial interests
I have no sponsored links on my videos
this is just for educational purposes
please always check the description of
the videos for additional material
with my first two videos XRP – the big
picture and ILP – all the money
I may have triggered your appetite a
little
but this video will make you really hungry
because I am trying to
explain why I think
XRP has to reach high prices
by high prices I mean 4 digit prices so do your own
however this is no financial advice
so do your own research to back up your investments
if you think about investing into XRP
an additional note I want to tell that
my important videos and creating closed
captions in four languages English
French German and Portuguese
so feel free to share links to my videos or to my channel with people who speak those languages
if you’re new to XRP I
recommend you to watch my first two
videos XRP – the big picture and ILP – all
the money
so that you have a strong foundation to understand what I’m going
to talk about in this video
while I was talking mostly about
interoperability in my video ILP – all the money
in this video I will be
more talking about cost
on the screen you can see the six reasons why the nostro accounts
banks have to have in the current or traditional payment systems are so expensive
While RippleNet or more explicitly xCurrent addresses foreign exchange
payment operations and Basel III compliance
the use of XRP can address the cost which arises
on liquidity on
Treasury operations and on currency hedging
While those terms sound rather
cryptic and are highly financial terms
let’s stick with the notion that
nostros are expensive
and that the target of ILP RippleNet and XRP is to get rid of the nostros
a short recap on what a Nostro account is
let’s say I’m in Switzerland and I wanna pay
or I wanna send money to the family of
my wife in Brazil
so they would want to cash out Brazilian Real I however want to send Swiss francs
so my bank needs to have an account in
the bank of the family of my wife in Brazil in Real
such that the bank in
Brazil can pay out the Real
to the family of my wife
enter XRP
now this is way over simplified
but just for you to get the concept
in the future it’ll
be like that my bank in Switzerland
buys XRP with the swiss franc
because XRP is decentralized and is rather fast
it can be sent to Brazil within seconds
to the bank of the family of my wife
the Bank in Brazil will sell the XRP for Real
such that the bank can pay out the
Real to the family of my wife
as you may have noticed in this scenario my bank
doesn’t need to have the nostro account
an account on the Brazilian bank in
real anymore because it uses XRP
as a bridge asset between the Swiss Franc
and the Brazilian Real
well now
let’s talk some figures and I hope you won’t
be intimidated by those many many zeroes
you will be seeing
when XRP was born
a hundred billion XRP were created
a hundred billion a 1 with eleven zeros
one XRP is divisible by 1 million
those smaller pieces are called drops
so 1 million drops make up one XRP
this 100 billion is actually decreasing
because each transaction costs a few
drops and there is about I think eight
to ten different transaction types on
the XRP ledger
a payment transaction I think the minimum cost is 45 drops
now let’s look at some real
figures
Swift the traditional system
is supposedly transacting about five
trillion a day
that’s a five with 12 zeros
now let that sink
you need to put your big-boy pants on
now you could argue five trillion
needing to be transacted
with a hundred billion even if every XRP were used just once per day a dollar price of 50
per XRP would already be sufficient
to move the five trillion
the previous calculation five trillion divided by a hundred billion
equals to a XRP price of $50 is not sufficient
I have made other videos where I explain why this calculation doesn’t work out
well
in this video we will look at the
most simple explanation why XRP price
actually needs a four-digit price
if high-value payments are to go through
the system
this simple explanation works like that
David Schwartz the CTO of
Ripple has in the past in several social media confirmed
that at the current
price which is below $1
low value high-volume payments are not a problem
however we’re looking for high-value high-volume payments
now let’s take a
look what that actually could mean
through various researches I have done I
came to the conclusion
that an upper limit of $10,000 is equally sufficient
to assume the maximum value for a low value payment
on another research I have
done I figured out that there are
payments which are larger than 1 billion
dollars
as a matter of fact
in Europe and European system over 200
such payments go through the system
every day
because I don’t want to make
you crazy about price
let’s do the conservative calculation
let’s take the
upper maximum for low value payment and
a rather conservative value for high
value payment 50 million
the factor of 50 million divided by 10,000 is five thousand
if we apply that factor to the current price
which is around 30 cents
then we reach easily a dollar price of
fifteen hundred per XRP and that’s a
very conservative estimate
as I mentioned before in other videos I show
different perspectives
which have basically the same result
that a four
digit XRP price will be needed in the long run
if high value payments are to
be sent through the system

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