You might know XRP as one of the fastest and most scalable cryptocurrencies in the world today. “A whopping 76 billion dollars in payments are sent through a vast network of banks every day Ripple is a tech company in San Francisco that wants to help banks move that cash from point A to point B faster and more cheaply. Ripple wants to do that by utilizing a digital token called the XRP.
But did you also know that it was designed to operate at ten 10,000 dollars per coin? “So is Ripple the next big breakout coin?” “What Ripple really is going after is the SWIFT network or international payments transfer? So what you’re talking about here is an upgrade of the international financial system And that’s a very big market.” The obvious question you might be asking now is can it go that high? Let’s find out! If this is your first time here make sure you subscribe and click on the bell so you don’t miss any new videos. When XRP was created it was designed to be a replacement for both institutional and retail financial systems in every market around the world How do we know this? If we take a closer look at how XRP is constructed it becomes obvious. A famous quote from Ripple Labs co-founder Arthur Britto provides us with an interest in clue.
In 2017 he wrote “XRP must be scalable to accommodate 7.5 billion people” this quote provides insight into the scale of Ripples ambitions to be used by the global population First let’s examine some of the main features of XRP that support the claim that it was designed to carry 10,000 dollars of value per coin. XRP’s primary use case is to enable cross-border payments that are faster cheaper and more reliable than existent systems such as SWIFT “Ripple CEO Brad Garlinghouse joins us right now. Some say a ripple could be the next Bitcoin. What do you think Brad? Is that a compliment that Ripple could be the next Bitcoin? well I think if we’re solving a real problem and it’s at scale than I think it’s a compliment Some I think may look back on Bitcoin and find that it was the Napster of digital assets what I mean by that is Napster was the first to digitize music and demonstrate Hey if you digitize music you can do a lot of cool things with that, but ultimately they were circumventing trademark laws They’re circumventing royalty payments and government stepped in and Napster was not successful but Spotify iTunes Pandora they were very successful I think what you’ll find is that maybe the next generation of digital assets Ends up solving some of the original problems that bitcoins set out to solve.
So ripple net is trying to take on SWIFT What’s been the traction light who’s coming board? well It’s interesting as you step back and look at this if you and I decided we’re going to send 10,000 dollars to California today the fastest way is for us to do it would be drive to the airport and fly it there That’s a crazy thing to think about when you’re in the age of the internet and yeah We’re used to information on demand when we think about the customers that have come on board.
It’s because we’re solving that real problem We’re changing the nature of a payment taking days to settle to California to seconds so we now have well over a hundred customers ranging for some of the biggest banks in the world to payment providers to the Western Unions, Money Gram Lindland pay out of China back to your questions is XRP the next Bitcoin? If we work with the system To solve this problem and we can solve that problem at scale a problem measured in the trillions of dollars There’s a lot of opportunity to create value in XRP.” Essentially XRP is trying to provide a reliable on-demand source of liquidity for cross-border payments Now let’s define “liquidity”. Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the assets price what we see in today’s market is price volatility as a relatively small number of investors buy and sell XRP on exchanges Liquidity for XRP or any other crypto comes as the price rises, higher prices equals higher liquidity The fact that Ripple Labs locked up 55% of the total XRP in timed release escrow accounts and has been disciplined in relocking the unsold portions of each release will help to eventually drive the price higher.
Even though Institutional partners are likely buying XRP over-the-counter from these releases this is not reflected in the published exchange prices. During the last six months XRP’s price has ranged from 0.25 cents all the way up to 0.60 cents, which represents a 120 percent range either side even though this seems like massive movement It is not problematic for institutional use because of XRP’s fast three-second settlement times. “Big part of the of the value proposition of Ripple I think is the cryptocurrency the XRP and there we do find that the banks are also they are hesitant to to convert things into a cryptocurrency right now because of the Volatility in the currencies because of the fact that you don’t have the deep liquidity that you have in for example The dollar.
I hear people talk about volatility and I feel like they’re propagating this misinformation that the volatility risk of Fiats It you know volatility is just a mathematical calculation of time times volatility If you hold fiat for let’s say an average SWIFT transaction today’s in the order of magnitude two days that’s about a hundred and eighty thousand seconds an XRP transaction is three seconds. So if you take a low volatile asset times a long-duration Fiat or a high volatility asset versus a very very short amount of time. It turns out mathematically There’s less volatility risk in an XRP transaction that there is in a Fiat transaction The difference is you have market makers when you do a SWIFT transaction There’s banks saying as a market maker saying I’ll lock in that rate I’ll take the volatility risk for the next two or three days with XRP You don’t have to do that because it’s settled so quickly What is problematic however is that this price movement was driven by relatively small retail Investments to move value on the scale of Swift’s five trillion dollar of daily transactions requires much more liquidity than is available in today’s XRP pool if 45 billion XRP are available.
This would require a price of approximately 111 dollars per XRP We know that some of the excerpts supply has been burned or lost by a lost private keys and a much larger percentage Is probably locked up as long-term investors hold XRP Thus an even smaller supply of XRP requires an even higher price to provide the minimum liquidity to accommodate Swift international payments retail payments credit cards and Institutional and retirement investments such as Grayscale and Morgan Creek capital will drive demand for liquidity this increase in liquidity will also raise the price which provides the liquidity which creates a circle in which demand increases price which increases liquidity which increases demand Once the cycle gains momentum, it’s almost impossible to stop it.
It has so much energy So how high can this go? As of October 2017 it was calculated that the value of the world’s asset classes total one point one four quadrillion dollars With above-ground gold at seven point seven trillion global stock markets at 73 trillion global money supply ninety point four trillion global debt 215 trillion global real estate 217 trillion and derivative markets at five hundred and forty four trillion if the entire one point one four Quadrillion dollar value of all asset classes was tokenized by a XRP that would require at least eleven thousand four hundred dollars per coin this example clearly Demonstrates the scale of liquidity that XRP is designed to handle customers that want to take advantage of using a digital asset like XRP for liquidity what that means is instead of Pre-funding literally the trillions of dollars that banks have with other banks around the world. They pre fund that amount that sits there It’s really dormant cash sitting there with digital assets You can make that much more real time to enable a payment across a border into another currency in real How much money is pre-funded and how long does it typically sit there? There’s 27 trillion dollars sitting in these bank to bank accounts.
They’re called Nostro accounts Voster accounts. Yeah. Yeah It really is a problem that if we can reduce the time the friction the cost We really can’t accelerate global commerce and by reducing that friction you accelerate that engine. It’s good across the board It’s good for both companies in the United States. It’s good for the unbanked communities across Africa It really can fundamentally change the way the global financial Infrastructure is wired divisible by six decimal places meaning that the smallest unit is one millionth of 1 xrp. Think about this. Why would XRP’s designers make the token so divisible in the first place? At a value of 40 cents per coin This is absurd after all who could possibly require the use of one millionth of 40 cents You wouldn’t do that unless you plan for the token to be much higher where it currently is but a much higher token value say $10,000 per XRP that divisibility makes sense for two reasons low transaction cost and affordability for small retail use the minimum Transaction cost required by the network for a standard transaction is 10 drops it sometimes increases due to higher than usual loads even in a 10,000 dollar XRP value the transaction cost still would only be approximately 10 cents.
This is still Exceptionally cheap one cent is arguably the smallest denomination That would be necessary to use XRP as a means of transacting everyday retail Exchanges even in developing markets this could provide affordable access to banking and digital financial transactions for even the unbanked explain the unbanked the issue of the unbanked is such a fascinating thing that first-worlders don’t really think about much I certainly don’t. but explain how that helps well if you think about it today that the Banks want to serve customers as long as they can serve them profitably if they can’t serve a customer properly They’re not going to do it So when you talk about a migrant workforce For example in Africa that has not obviously making a lot of money and is taking that money from country to country The cost of using the banking system would actually exceed that the the income that they would have if we can reduce the friction Globally and make it easier for that migrant worker to hold assets to move those assets without costing them lots of money They then become part of the banking that the kind of global financial community I think that you know we think about an internet of value in ripples long term kind of 10-year vision is how do we enable an internet of value how Do we enable value to move the way information moves today as you refer to email as an example? It’s really bringing those communities into the system and allowing them to participate and benefit from being a part of that financial system in its 2017 global findex database the World Bank found that about 1.7 billion adults remain unbanked without an account at a financial institution or through a mobile money provider Approximately half of these unbanked people live in just seven countries Bangladesh China India, Indonesia Mexico Nigeria and Pakistan the report also noted that because two-thirds of this unbanked Population have access to a mobile phone the door is opening to mobile banking Services, as long as mobile access can be combined with well-developed payment systems I can’t resist asking you one thing Patrick.
Can you tell us the story of how much you learn from the data? and from the data points that are left by Transactions that are happening as far as borrowers are concerned the woman in the market The story here is we now have a platform and we were looking at this information or one of the key lending platforms And we discovered that a lot of the transactions more than 40% of the transactions Take place between 3 o clock and 5 o clock in the morning and we began to explore this and also discover that about more than 50% of the people that were borrowing what women so there were problem here are women insomniacs you know in Kenya? and what we wanted to investigate this but in a upon Further investigation we discovered what was going on, basically You have traders that are operating in the various markets, right? They are purchasing in the markets and they are going to sell in the street corners and in the kiosk those sort of things so they wake up at 3 o’clock in the morning and Boar off from this lending platform under a cellphone on your cell phone.
They are still in their houses It’s all done on the cell phone they borrow and they’ll get the money they’ll then call trusted wholesaler and ask for bags of this and the other and Pay by their self through their cell phone They’ll then call the person who moves this thing and will then instruct them deliver at the kiosk She will now wake the kids feed them send them to school and at 6:30 She is at the kiosk with all the products ready to sell and beginning a day I haven’t even left my bed at 6:30 as a governor and this woman has done all these transactions These are people who don’t have bank accounts But they’re still conducting business and they’re doing it on their mobile phones in most of the developing world You have a lot more people using mobile devices Then you have bank accounts If you can make the financial market available to them Even if they don’t have a bank account You’re now opening up a massive new market and if you make transactions affordable enough now They’re going to use that market XRP will enable even the end bank to have access to digital financial tools that are fast stable and The design decisions that went into creating XRP structure leads us to believe that it was designed to operate at ten thousand dollars and to serve a truly global Market ripple is looking at humanity scale usage, which is massive think of what Google does for information Ripple will do for value if you made it to the end of this video Let me know in the comments if you’re bullish or bearish on XRP in 2019 also, make sure you subscribe and like this video.
Thanks for watching and I’ll talk to you guys later.