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Recently, the XRP Community was divided among the lines of those who believe in a theory and those who don’t. The theory in question is whether XRP will reach $589 in price before the end of the year or even $10,000 one day.
Primarily, the $589 theory has 3 possibilities of occurring, according to the XRP community. The first and most widely discussed method is that the launch of xRapid will push the price of the coin due to a huge increase in trading volume. Second is that the increased burn of XRP as fees in this trading volume will drive the price. There also exist proponents that believe that 58.9 is the atomic mass of Cobalt, which is the name of an update that is slated to increase the speed of XRP.
The most likely out of these three is that the launch of xRapid will push the price of XRP to $589. xRapid is Ripple’s fastest product till date for cross-border transactions and utilizes XRP as a bridge currency for transferring between borders.
This means that any volume coming from cross-border payments will directly translate as trading volume for XRP, as the XRP needed for the transaction will be purchased and sold on exchanges on the sending and receiving ends of the remittance respectively.
The channel Working Money on YouTube broke down the economics of what would happen if xRapid launched the very next day. He calculated the average daily fluctuation of XRP and the average daily volume of the coin, which came out to 7.25% and $191 million respectively. He then proceeded to hypothesize what the price of XRP would be if Ripple captured 1%, 5%, 10% and 100% of the existing incumbent, SWIFT’s market share.
SWIFT approximately processes $4.7 trillion on every working day. If xRapid took on 1% of this business, the daily volume of xRapid would go to $47.8 billion. Considering that this is over 250x the average trading volume of XRP, it represents around 1,816% fluctuation by extrapolation, presenting a price of $5.56.
Similarly, the price of XRP for 5% of SWIFT’s volume would be $26.62 due to the trading volume being somewhere around $239 billion. 10% of SWIFT’s volume would amount to the price of XRP being $55.6.
XRP Was Designed for $10,000.
When XRP was created, it was designed to be a replacement for both institutional and retail financial systems in every market around the world. How do we know this? An examination of how XRP is constructed makes this evident.
A somewhat famous quote from Ripple Labs co-founder Arthur Britto provides a tantalizing clue. In 2017, he wrote, “XRP must be scalable to accommodate 7.5 billion people.” We’ll come back to this quote, but it does provide insight into the scale of Ripple’s ambitions to be used by the global population. First, let’s examine some of the main features of XRP that support my claim that it was designed to carry $10,000 (or if to be more precise – $11,400) of value.
With Liquid Sidechain, Users Can Make Use of Liquid BTC
Andreas Antonopoulos, the author of Mastering Bitcoin and a well-known Bitcoin proponent, spoke about Blockstream’s Liquid sidechain, the first Bitcoin production sidechain, during a Q&A session on YouTube. Here, the author also spoke about whether there was any competition between Bitcoin’s Liquid sidechain and XRP/ Ripple, with respect to use case.
Antonopoulos started by talking about the Liquid sidechain, wherein he stated that the product was designed by Blockstream, a well-known company in the Bitcoin space that has been a part of numerous projects related to Bitcoin. The initial discussion for a Bitcoin Liquid sidechain solution commenced in 2015.
Here, a sidechain refers to a separate blockchain that is connected to the main chain via a two-way peg, a mechanism that enables assets to be fungible at a predetermined rate. Andreas explained sidechain as:
“[…] you can move [value] from Bitcoin’s chain… to this other blockchain, use it [there for some purpose], and then move it back.”
Sidechain introduces a concept wherein a user of the main chain has to send coins to an output address, which is then locked up to avoid the user from using it for other purposes. This is followed with a confirmation that is transmitted through the chain after the initial transaction is completed.
Succeeding this, the same amount of coins will be released on the sidechain, which can later be used by the user. The same concept applies when the coins are transferred from the main chain to the sidechain.
* To learn more about XRP coin, Ripple Labs company, and their innovative solutions, please check out our awesome ripple guide.