Ripple Explained - Chapter 5: Facts and Figures about Ripple

Ripple Explained - Chapter 5: Facts and Figures about Ripple

08 August 2019

Vontobel now offers investors access to the crypto currency «Ripple». But what is Ripple (XRP)? In nine chapters, we want to give you high-quality knowledge about the exciting topic of «Ripple».

Did you know that...

... there is a maximum of 100 billion XRP.

All 100 billion XRP ever created already exist, although not all are in circulation. Therefore XRP cannot be mined in contrast to Bitcoin or Ether. Thereof approx. 50 billion XRP are stored on a cryptographically secured escrow account in order to guarantee a secure XRP supply. Thus it can be checked mathematically how many XRP are supplied to the market.

Once a month up to 1 billion XRP are released. Ripple Labs sells this amount of coins to crypto exchanges and institutional investors. If not the entire quantity can be sold, these are again transferred to the escrow account. Since 2016, Ripple has sold more than USD 890 million worth of XRP. In the process,  36% were sold to crypto exchanges and 64% to financial institutions. Ripple has proven to be a responsible operator of the XRP supply, eliminating concerns that Ripple could flood the market. Through this mechanism, RippleLabs also ensures that the market is not flooded and the value of XRP is subject to strong fluctuations. However, the sale of XRP to large investors may have an impact on the current XRP price.

... in terms of market capitalization XRP is the third largest crypto currency in the world.

Ripple's crypto currency XRP, with a market capitalization of about USD 13 billion, is the third most successful in the world, only outperformed by Bitcoin and Ethereum. However, this calculation only takes into account all coins in circulation. If all 100 billion XRP owned by Ripple Labs and the XRP in the escrow account were added, the market capitalisation would be USD 31 billion, according to Ripple.com.

... a transaction only takes 4 seconds.

RippleLabs promises to process transactions in just four seconds. The average Bitcoin transaction takes 60 minutes. Ether transactions are significantly faster, but typically still take two minutes or more. In addition to speed, Ripple's network can handle significantly higher transaction volumes than other leading crypto currencies. Bitcoin and Ethereum can handle 7 and 15 transactions per second, respectively, which represents a scalability problem. Ripple's network, on the other hand, consistently processes approximately 1,500 transactions per second, and the company claims that it can scale-up to 50,000 per second - on a level with Visa's network capabilities.

Bitcoin transaction fees are known to be high and rose to USD 55.00 by the end of 2017. Currently, the average Bitcoin transaction fee is around USD 1.46, according to bitinfocharts.com, but that still makes Bitcoin less practical for daily payments. The second largest crypto currency Ether, averages about USD 0.13 in transaction fees (peak at USD 5.53). Meanwhile, XRP's average transaction fee is currently USD 0.0002, and peaked at USD 0.42.

... XRP reached its peak at USD 3.39 during the 2017/2018 crypto boom.

XRP has not experienced the same extreme performance as Bitcoin. Ripple was founded in 2012 and after a quasi zero growth from 2012 to the beginning of 2017, it only reached the double-digit cent range in May 2017. In December of the same year it reached the USD 1 threshold. During the great crypto-hype at the turn of the year 2017/2018, the currency experienced its first high-level climb and reached a peak of USD 3.39.

XRP's rapid ups and downs are the best example of how the wild speculative bubble of the Bitcoin price is spilling over to other crypto currencies. One of the reasons for the high rise is the announcement of a collaboration with the financial services provider American Express. Even after a price slump, Ripple currently stays at a relatively constant price range between USD 0.50 and USD 0.30. In the long run, however, the development is impressive. Experts are positive about the medium-term prospects for the project's success, precisely because Ripple also cooperates with banks and could therefore be used to a great extent in the foreseeable future. Ripple Labs cannot directly influence the price of XRP. However, the activities of RippleLabs can indirectly influence the price of XRP, as many investors still regard the crypto currency as a proxy for the company.

... Ripple was not created to serve as a means of payment, but as a payment method.

A common misunderstanding is the idea that all crypto currencies are designed as means of payment. If this was the case it would be difficult to claim that we need more than just the Bitcoin. Many crypto currencies, including XRP, are not designed as means of payment. In other words, your favorite merchant is unlikely to accept XRP tokens in the near future. Instead, XRP is a crypto currency that is designed as a payment method: it is intended to move money from A to B more efficiently than current methods, such as bank transfers.

 

Important Notice:

This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the securities, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the sole binding sales documents for the securities. It is recommended that potential investors read these documents before making any investment decision in order to fully understand the potential risks and rewards of deciding to invest in the securities. The documents and the key information document are published on the website of the issuer on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information contains an indication of past performance. Past performance is not a reliable indicator of future results.

This document and the information contained in it may only be distributed or published in countries where such distribution or publication is permitted by applicable law. As stated in the relevant base prospectus, the distribution of the securities mentioned in this information is subject to restrictions in certain jurisdictions. This advertisement may not be reproduced or redistributed without Vontobel’s permission.

26/08/2019 09:12:30

 

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