I need to talk about something, and if you’re a ripple fanboy you’re probably not going to like it.
This wasn't supposed to be an XRP bashing post, but here we are.
I'm not going to point out what's wrong with Ripple the company, but I do want to raise some things with respect to price estimates.
I’m going to explain what supply and marketcap are, because I don’t think it’s understood by people who make these estimates, particularly XRP retail investors.
Numbers here are rounded because a) math is easier and b) they're volatile . Point isn't changed by a few % here or there.
where are we?
1 XRP is currently worth about 20c. XRP as a whole has a marketcap of about $10billion.
What’s market cap? It’s basically the price of all the XRP that exists. Put another way, that’s the price of each token, multiplied by the total number of token.
I saw a post earlier suggesting $28 was a reasonable target for XRP price. And that’s actually a ‘conservative’ estimate by many ripple ‘community members’ (crypto-speak for bag holders).
That would be a 140x increase in price from 20 cents.
So the market cap (assuming no new XRP is created) would also have to increase 140 times, to 1.4 trillion dollars.
The combined marketcap of ALL crypto projects is around 220billion. so to reach $28 XRP, it would need to replace ALL other cryptocurrencies and the market would have to grow 600%.
If you think that’s realistic, go for it. Personally I think that’s absolutely never going to happen, and it really worries me that people throw that number around as though it’s feasible.
long term community members, since 2017.
The reason there are so many bagholders of XRP is because during the hysteria at the end of 2017, people thought it was a bargain. Bitcoin was $20k, Ethereum was $1000, and XRP was under $3.
At first glance, a lot of people thought: ‘huh, BTC and ETH are expensive. this XRP thing is really cheap by comparison, it’s only $3, i should invest in that”. All because they didn’t understand marketcap and supply.
Supply is the total number of a cryptocurrency.
- there will only be 21 million bitcoin, ever.
- there are about 45 billion XRP coins.
This means that there are 2100 XRP for every bitcoin. That’s why bitcoin is expensive compared to XRP. I’m sorry to say anybody who is throwing around $28 targets is either misinformed or trying to get the price up so they can sell their pile.
how did investing in these things work out?
Assume you'd listened to the people shilling XRP at the start of 2018, bought $1000 worth, and held for the last 2 years (which would have been a dumb move in hindsight, even if you just love XRP for the sake of it, because you could have sold and bought a lot more as the price fluctuated).
But let's say you fell into a well, and only just got rescued. Let's compare that to the other 2 big players, BTC and ETH.
BTC price was $20000, it's now about $8000. Man, you'd be down almost 60%. Yikes.
ETH? Was about $1000, currently it's around $160. Crikey - even worse! Down almost 85% !!
XRP price at top was $3, and it's now 20c . You'd be down around 95% on that investment.
Your $1000 of XRP would now be worth about $60.
The horrible thing is at that price, it's not really worth selling. So you kid yourself that when it gets back to when you bought, you'll sell. A lot of us have been saying the same thing for 2 years with our altcoin bags, don't do that.
but it's up!
Yeah, it's doing ok right now. So are a lot of altcoins. Because BTC went up 10%. If your altcoin didn't go up AT LEAST 10%, you'd have been better off buying bitcoin. And if you bought at 20c, and sold at 23c, you did great! Seriously, that's a 15% profit. Compare that to a bank, not bad. But if you bought at a dollar, you need a 500% profit JUST TO BREAK EVEN.
It's not easy money any more. Most altcoin charts look like this the last week:
zoom out, before you get too excited.
- Crypto people warn you off XRP, because XRP has been 'the future of bank payments' since well before 2017.
- It's very attractive to newbie investors, because it's 'cheap'. It's not cheap.
- XRP is not the underdog. It's the number 3 crypto project. Everybody has heard of it. There are just a LOT of XRP around.
- understand the impact that coin supply has on value, or you will eventually learn the hard way
Thanks, good luck. If this offended you in any way, consider if it may be because you have a pile of coins you've watched tank in price, and are looking for somebody to get angry at about that.