As said by others, market cap is not enough. There needs to be a better metric that takes in to account "true" market depth. I say "true" b/c the market depth on CC exchanges is generally accepted to be BS due to widespread spoofing/wash trading.

Basically, the total market value of the coin should be the maximum USD (or any other reference currency) that could be extracted by continuously selling (an unbounded amount) of the coin until the price approaches 0.

Really ? Why ?

The price for any good is the marginal price. Essentially it's the price that should get paid for having a "single item" of the good change hands. Take a stock. MS stock may be quoted at 80$, but I guarantee that if you want 50% of MS stock, you'll have to pay more than 80$ per share.

So prices for large or much smaller quantities of the good change hands are different, and are not quoted unless required. (smaller than one would be still one, but only selling after the seller has to wait a long time). Since such transactions often substantially change the demand for the good, the fact that such a transaction exists often substantially changes the price.

This is true for cryptocurrencies, stocks, cars, shavers, toilet paper.

The point is that marginal price is easily manipulated, when the good is easily electronically traded. Stock trading is heavily regulated (& companies can issue more shares if demand is very high) which prevents the massive amount of manipulation we see in the CC space. Shavers/cars/toilet paper have higher transaction costs and aren't typically seen as assets with which to speculate.

This manipulation makes the marginal price a potentially bad way of ranking different assets, especially when the market depth of the asset is relatively thin (i.e. on many CCs).

The point of the metric I gave was that it is more robust of a measure to manipulation than market cap. What do you think is the "value under liquidation" [0] (VuL) of XRP? BTC? probably significantly less than the market cap. The more interesting thing to do would be to try to estimate it for different cryptocurrencies and compare them (i.e. XRP vs ETH). That would be fairly difficult though, but perhaps an upper bound could be estimated, better than the trivial upper bound of market cap which assumes that the market impact of selling is 0.

[0] - https://cims.nyu.edu/~almgren/papers/optliq_r.pdf

> The point of the metric I gave was that it is more robust of a measure to manipulation than market cap. What do you think is the "value under liquidation" [0]

The market cap of Google is 780 billion.

The value under liquidation of Google is (you can find this in their financial reports) ~100 billion. Even that is a vast overestimation of what it would fetch in a firesale, because it's assuming, for example, that with Google firesaling, the ad "inventory" would sell for what it's currently selling for. (There another 70 billion in "intangibles" (guess how much that fetches in a firesale)).

Granted that's pretty high (a company that pays dividends, like Microsoft, it'd be way less, and for insane stocks like Amazon ... let's not go there).

Which do you think reflects the value of Google ? It's an interesting question, and you can if you like get a bachelor, masters or PhD in various ways to answer that question.

But I would say there is no one good answer. Not for XRP, BTC, or for Google, not even for things like the US Dollar.

How is this anything but a bubble? I'm a bit of a Luddite on the whole area of cryptocoins, but I literally first heard of Ripple three days ago. I can't fathom how the entire corpus to them could be more valuable than whatever portion of FB Zuckerberg owns.

XRP could be worthless, but Ripple the protocol and company is pretty advanced and has decent traction around the world with traditional FIs. Not many of them are using XRP and I’m bearish they ever will, but the fact that there’s an infrastructure fintech you just heard of 3 days ago means nothing.

There is a good writeup here: https://medium.com/@twobitidiot/i-see-you-xrp-fcf151feb96d

> but I literally first heard of Ripple three days ago.

I haven't heard of nearly 100% of the world's billionaires or many of the top companies by market cap in the world. That doesn't mean they are bubbles. I haven't even heard of many of the world's currencies. They aren't bubbles either.

Ripple is 6 years old. So many other businesses have started and become huge 6 years later and not been a bubble. Was Google a bubble when it was worth tens of billions 6 years after it started?

That's the point, with a credible currency you don't need to know the people or companies you're trading with. Instead of peers, you trust that the currency used for trading is somewhat stable — so it makes sense to trade using that currency.

With a single company to trade with, or a tiny cryptocurrency, you are trading with a very, very small fraction compared to an established global currency.

I find it amazing that people are not getting this.

Oh if only this were true. Just so we're clear when you say "established global currency", what you're saying in practice is "SWIFT" (and a few "competitors").

Ok, so one of the problems things like bitcoin solve is that trust in the currency really encompasses trusting quite a few organisations, and these being trustworthy is only true up to a certain transaction size, and only on large averages. Basically, the issue is that banks can't be trusted, and therefore anyone big enough to make double-digit million value transactions can't be trusted (because they might be the bank, own the bank, or simply owe the bank a lot of money, ...). There are also more complex cases where governments get involved and muck things up (financial fraud, bankruptcy cases, tax investigations, ...). And there are other cases (terrorist financing, sanctions, ...).

All of those problems should not be the concern of merchants, but they are in practice, because governments have unilaterally decided that interfering without recourse in payment systems is the way they'll police the world. So they change payment streams (which are between 2 parties, say A and B, and they have some problem with A). Issue is always the same: B buys something from A. One of the parties in the chain, or a government, or the police, or ... has a bill for A, and halts the payment. A then claims (truthfully) non-reception of funds and refuses to deliver. B is left without recourse, without money, and without the good they paid for. Needless to say, nobody accepts responsibility for damaging B. But it gets worse.

So in fact this is one of the big advantages of cryptocurrencies, actually. With dollars (or any such currency), even if they're on your bank account they can disappear months later.

Essentially, large banks, judicial system and governments have the ability to impose their losses on others, in the "traditional" currency systems, and they use that ability too much, without caring who else they damage in the process.

When it comes to "if I have the money, I can trust that I actually have it" cryptocurrencies (all of them) are far superior to SWIFT (essentially all banks are part of SWIFT) in terms of what merchants consider trustworthiness.

There are other advantages that they also have. For instance, despite the complaints, bitcoin is still far faster than SWIFT.

> Basically, the issue is that banks can't be trusted,...

And crypto exchanges, and all the other intermediaries you'll probably end up dealing with in practice, can be trusted?

I get the usefulness of a decentralized permissionless network for peer-to-peer transactions. But Bitcoin and most other cryptocurrencies today are looking pretty darn far away from that promise.

Comparatively I still believe they're more trustworthy than the fiat currency ones. But that doesn't really matter in practice :

As long as your assets are in the cryptocurrency itself, and you're happy with that, there is no need to trust any intermediaries at all.

You can have local and international money transfer that safe, final and trustworthy. Money, of course, meaning bitcoin (or ether, or ...). That's a valid usecase.

That's the key.

You can find the citations here https://en.wikipedia.org/wiki/Ripple_(payment_protocol)

I did not lie once. Stop calling me a liar.

I think most commonsensical people are starting to realize how big of a bubble this is. I mean Facebook is used by one BILLION people DAILY -- and it literally knows almost everything about its users. To say that XRP is even remotely as valuable as FB is just so trivially untrue, it seems pointless to even argue.

I remember seeing a bumper sticker in silicon valley that said "Please Lord give me just one more bubble". It looks like their prayers have been answered with cryptocurrencies.

Is it really a Silicon Valley bubble?

Step Right Up. Everyone can be a winner. Bargains galore. That's right, you too can be a proud owner. For One-tenth of a dollar, one-tenth of a dollar, we got service after sales. You need Ripple coins? We got Ripple coins. How about you sir? Something for the little lady, something for the little lady. Ma'am? We have the best quality Ripple Coins in the world here. Get your coins folks before we run out...

Ripple has retained a majority of XRP currency. So at any moment, buyers can unknowingly transact in something akin to an IPO, without actually owning a part of the company, or having voting shares. In such a case, you're just forking over money to the company, not to other XRP owners. Reeks like potential Ponzi.

I'm fairly sure he wouldn't be able to liquidate anywhere near as many coins as he has without destroying the market

the prisoner billionaire: as soon as he starts selling one dollar his wealth goes to zero

OTC markets exist.

there is no such demand for cryptos i think, since its all speculative

If virtual currencies are the future and anyone can create his own currency, how does this affect inflation in real economies? these are endless trillions of dollars created out of nowhere!

AFAICT it's getting harder to convert between the various forms of play/virtual money and actual money. When the bubble pops, good luck exchanging alphanumeric strings for actual stuff. There's some seriously shady stuff keeping it inflated... https://twitter.com/Bitfinexed

Except he’s not because all his coins are vesting. Are Zucks FB shares vesting? Don’t think so.

So is there a good explanation of why banks would use Ripple and why it's better than their existing options?

Ripple is a scam to round up as many Bitcoins and Ethers as they can. When bitcoin is $200,000, Ripple will still be $2-3.

Yes. From what I understand researching this company and currency for a couple of months, ripple's technology eliminates the middle-man banks that are involved in cross-border payments , thereby eliminating the fees they all charge, and also reduces the time taken for the funds to reach destination from 3 - 5 days or more, down to 3 seconds.

They use XRP, the ripple crypto currency to hold the sender and receivers funds during the transaction.

See also this video that explains it really well => https://www.youtube.com/watch?v=Q2YHhLkOO9g

and this one, which is more technical and explains their blockchain technology / xCurrent software. https://www.youtube.com/watch?v=bU79HunxJp8

In the video that you have posted, they do not seem to transfer XRP, but USD. In fact, XRP is not needed to use their products (Assuming the video was about 'Ripple Connect')

Source: https://www.reddit.com/r/Ripple/comments/6jd9w6/this_is_the_...

Sell!

Tulips for everyone

Actually I am wealthier. I just made a new coin called "hacker coin". There are a trillion coins, and my girlfriend just bought one of them from me for $10.

It has a 60% premine that I will be using to attract people to the platform (lol).

So my current net worth is about $6T.

Your girlfriend just gave hers to me because she didn't see the point of it, so the hacker coin market just crashed, losing $6T.

There are markets with people buying and selling Ripple. This fundamentally changes the situation and makes your analogy not useful. Clearly you're joking, but clearly Ripple has more to it than your silly story, and nobody would ever conclude you are worth $6T. Your math is flawed in that is not backed by a market at all, but Ripple's is.

I'm not justifying its valuation, but your argument is fallacious.

No, Ripple’s market cap is completely fictitious. The circulating supply is tiny and if this “billionaire” tried to liquidate a significant portion of these ripple tokens, it would crash the market. Look at the 24h trading volumes for xrp.

It looks like it's trading around between $1B and $8B a day: https://coinmarketcap.com/currencies/ripple/historical-data/

It doesn't seem that difficult to cash out at least few billion with that kind of volume.

If Zuckerberg tried to liquidate a significant portion of his Facebook stock that would also crash the market.

That's not true. His girlfriend bought one for $10. It's not a large market, but somebody thinks they deserve at capitalization of $10T USD. Or are you saying that cryptocurrencies with limited float compared to full circulation are likely to have distortions in their valuation?

> but somebody thinks they deserve at capitalization of $10T USD

What? Where on earth did you get that? Because his girlfriend bought one for $10 from the story, you've now created the idea that she did the math, considers it a worthy investment and knows the full market cap? What if she just wanted $10 of entertainment for the evening by buying a silly coin and talking about it? That seems like a solid investment to me, much cheaper than a movie for example, and does not imply that she thinks the full value is worth $10T USD. She could easily be a rational investor who thinks no such thing.

A market composed of numerous entities trading large sums of money is a much better system to decide the price of something. One person making a single purchase for unknown reasons is not a "market".

He does have a point. I can understand that Bitcoin and Ethereum have value, but I have a hard time understanding why Ripple (XRP) has the value it has. The way I understand it:

- Ripple offers blockchain software aimed at banks, who use it for transaction settlement. These banks will use a private blockchain, obviously, that is separate from XRP.

- XRP are pre-mined. Ripple investors and team owned all 100B of them at the start. They can sell them off slowly, as long as there is enough demand at the current price they'll all be billionaires.

I think Ripple have two good things going, but buying XRP seems like too good a deal for them, not so much for the buyer.