Spoiler: Probably not. If you take a look at the structure of Ripple, you can see that the price increases for Ripple are unlikely to be too high.
Which trader doesn’t know them, the enthusiastic glances into the crystal ball: Ripple will reach 100 Euro in April, the 1000 mark will come next year! The opposite of FUD is HEC: Hype, Enthusiasm and Certainty. Hype, enthusiasm and (deceptive) security are just as easy to get carried away by as their opponent. But especially with Ripple there are some reasons against a too rapid rise in the price, especially the sheer amount of circulating XRP.
Why are there so many XRP at all?
With 38.7 billion XRP, the circulating amount of ripple tokens exceeds Bitcoin’s by a factor of more than 2000. In addition, Ripple still has some tokens (about 61.4 billion to be more precise) in its hindquarters.
This high amount of existing tokens is due to the intended use cases. Unlike Bitcoin, Ripple is not aimed at the end user, but at companies such as payment service providers, financial institutions and banks. XRP, the currency itself, is rather a service provider than a means of payment: it transmits any kind of value.
The network’s infrastructure also secures 1,500 transactions per second. So Ripple is a network that wants to guarantee fast transactions. (Here only the most necessary details should be disclosed, for a better understanding we recommend our tutorial). Users then pay a fee for the execution of the transactions, which, however, is not collected directly, rather the XRP tokens are destroyed.
In the past, the company was repeatedly criticized – with a total contingent of 100 billion tokens, more than half, 61.4 billion were in the hands of the developers. By their own account, they withheld them to guarantee liquidity, trust and applicability.
To better guarantee this, they introduced an escrow system at the end of last year. To this end, they have deposited the number of 55 billion XRP in, say, a “digital bunker”. These, in turn, have been divided into 55 packages, of which they distribute a maximum of one per month. Among other things, to compensate for burnt ripples (which are only a minimal fraction of the total amount), but also to create incentives for new investors. All XRP not required for these purposes are fed back into the escrow system and kept for later.
Will the ripple price once be 100 euros?
Due to the intended use cases and in order to guarantee a high degree of liquidity and thus stability, the ripple network needs a high volume of tokens. And it is precisely this point that makes it very unlikely that the ripple rate will rise to 100 euros. (Apart from the possibility of inflation, this is not the case here).
So what would it take for a ripple to be worth 100 euros? Here are some simple calculation steps to be made.
At the time of publication, just under 38.7 billion XRP are circulating at a price of 1.01 euros, the market capitalization is 39.1 billion euros.
At a price of 100 euros per ripple, we would be at a market capitalization of 3.8 trillion (that’s 12 digits behind 3). This is about 25.5 times the amount of money of Bitcoin’s current market capitalisation.
In other words, to make a ripple price of 100 euros possible, all crypto currencies currently listed on Coinmarketcap would have to lump their money into one pot and increase 8-fold to provide enough euros to pay all existing ripples. Unlikely.
But let’s take a look out of the crypto world and look at the stock market. If one orients oneself here at the market capitalization, following enterprises (no joke!) would have to add their market capitalization, in order to come rudimentarily on 3.8 trillion euro: Apple (702.35 billion), Microsoft (584.14 billion), Amazon (543.87 billion), JP Morgan Chase (324.9 billion), Nestle (217.37 billion), Shell (241.2 billion), BP (234.1 billion), Coca Cola (166.45 billion), Boeing (166.45 billion).), Boeing (164.55 billion), Disney (136.05 billion), McDonalds (114.46 billion), SAP (112.68 billion), Siemens (102.9 billion), Loreal (102.23 billion) and Netflix (95.66 billion). Quite unlikely.
It is therefore above all the applicability in connection with the infrastructure of the network that makes overly large price increases unlikely. After all, Ripple competes with the usual payment processors such as Visa & Co by guaranteeing low transaction costs. Since these are calculated on the basis of the exchange rate, it is not i