3 Reasons Why XRP Is Going To Be The King Of Crytocurrency In 2018 And Beyond
Unless you have been busy holidaying over the last several weeks, you would have noticed that the XRP price surged and replaced Ethereum as world number 2 cryptocurrency just before the new year eve of 2017/18. Within one short month, the growth is more than 1000% and rising!
In my opinion, there are 3 reasons why XRP is going to be the king of cryptocurrency in 2018 and beyond.
1. Speed of the transaction
RippleNet is the payment solution provided by Ripple that uses XRP as the settlement currency. An XRP transaction only requires a maximum of 4 seconds to process as compared to several hours for Bitcoin.
The XRP Ledger is now capable of sustaining a throughput of 1,500 transactions per second. And this can be scaled to allows transaction throughput to increase to tens of thousands of transactions per second, bringing the scalability on par with Visa. The <4 second throughput is necessary if XRP is going to use for micro payment like paying Uber taxi or buying a burger at McDonald. No merchant is going to wait for several hours for the payment to get through.
RippleNet is superior to existing payment systems (such as SWIFT) for several reasons. It completes the payments instantaneously and ensures end-to-end communications that avoid failures and the need for humans to track payments manually.
Some people said that when banks signed up to use RippleNet, XRP is not required to make payment. That is true, but
Ripple is able to bring XRP liquidity to the table and payments can be settled instantly with XRP instead of in days with correspondent banking via the conventional Nostro/Vostro accounts. Once the banks have adopted RippleNet, there are no technical barriers to use XRP to settle payments.
2. Low transaction fee
Currently, the transaction fee for transfering XRP from one wallet to another wallet is just 0.00001 XRP. It is only $0.0000383 cents with the current XRP price ($3.8). In contrast, Bitcoin could easily cost you $10~30 dollars even if you are just paying $10 dollars worth of Bitcoin for a pizza.
Bitcoin is a commodity product, pretty much like oil, gas or gold, whereas XRP is a settlement currency designed for day to day use.
3. XRP is aimed to be a higher priced asset.
As David Schwartz (Chief Cryptographer at Ripple) was saying, higher prices tend to correlate with higher liquidity which means cheaper payments. In his Quora post, he quoted an example:
Imagine if you wanted to use bitcoin as an intermediary currency to buy a house worth $1 million back when bitcoin was priced at $100. In the process of trying to buy enough bitcoin to buy the house, you’d push the price up significantly. And when the recipient tried to convert those bitcoins into their local currency, they’d push the price down significantly. The effect would be so bad that back then, it would not have been practical to use bitcoins to buy a house.
Now, with bitcoin over $10,000, that’s a cinch. You can buy a million dollars worth of bitcoin without moving the market significantly because the price is higher and so you need a smaller fraction of the available bitcoins to do. So a higher priced asset is a better vehicle for payments, at least if you’re targeting high-value payments.
Happy Investing!