Ripple XRP Utility Barely Touched | HODLers In For Big Payday
As of April 16 2018, Ripple has to date 141 public partnerships throughout the financial sector. Of these known partnerships, a mere 17 are testing the use of XRapid, 2 are using XRapid, and only 7 are using the native token XRP in any capacity beyond testing stage. While these statistics are often highlighted in FUD news and blogs aimed at discrediting the use case and utility of XRP, they're seldom observed in light of the wider cryptofinancialsphere.
Why aren't banks and financial institutions using XRP?
Negative sentiments love to highlight that while Ripple has been making many key partnerships over the past 18 months, the price of XRP has not reflected these positive market sentiments, and therefore must reflect a lack of use cases for financial banks and institutions to adopt Ripples native token, XRP. While it is true the price of XRP has not skyrocketed to the moon in light of big-name partnerships such as American Express and Santander, and it is also true that a small percentage of partners (1.8%) are actually using XRapid, many commentators fail to see that this is all part of Ripples grand master plan. The single most important step for Ripple right now is connectivity between banks and financial institutions, connectivity being the operative word.
With products such as XCurrent (see video for more info), banks are able to settle realtime cross-border payments through the use of the interledger protocol. This prevalidates transaction details between the original bank, corresponding bank, and beneficiary bank on their ledgers before any payment is sent. With this validation process taking as little as 1 second, it is for obvious reasons extremely advantageous for banks to use. While banks can use the interledger protocol for settlements in fiat currencies there are several pain points for doing so.
1. Banks need a NOSTRO account with a corresponding bank to make a payment
2. Banks need to bridge transactions with liquidity from a beneficiary bank
That ladies and gentlemen is where XRP steps in. Banks owning XRP, for the purposes of making fiat equivalent payments on the ledger, essentially eliminates the need to validate the transaction through a NOSTRO account before it can be settled in a corresponding bank. With almost instant validation, there is a drastic reduction of liquidity required to keep up with real-time transactions, and not to mention the tremendous reduction in risk of currency fluctuation between settlement times.
It's all a matter of time and perspective. Financial institutions need to be connected before they can utilize the full potential of the interledger protocol and Ripples native token XRP. With Brad Garlinghouses crusade for financial partners increasing in momentum, it won't be long before seeing that figure of 1.8% climb 10 fold. For a full update on Ripples partnership momentum, take a look at this awesome spreadsheet here by Byron Smith. (View spreadsheet)
At the end of the day, the value of XRP will be driven not by speculation, but by utility. Projections for which are obviously very difficult. There are several ways that this could be calculated however; SWIFT market share acquisition, crypto market cap vs trading volume etc. For a rough XRP price guesstimate based on demand and percentage of SWIFT market share acquisition you can get an idea of these figures below:
0.76% = $7.53
1.9% = $9.75
3.6% = $12.68
5.9% = $16
18% = $53
33% = $116
43% = $132
These are the conservative estimates of prices that would be created by the current utility demand. It does not include speculative investment market making XRP into a store of value. (view global transfer market infographic here)
Brad Garlinghouse is expecting to be working with 50% of the worlds banks within 3 years, so a result even mildly close to this goal will see the current price for XRP be a distant flickering memory, and will surely be for HODLers one of the biggest paydays of their lives.
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