Myth #3) Market Cap can be used to predict maximum value
Man, this one hurts. How many times have you read people's valuation of "well, there's trillions of dollars moved by SWIFT every day, so trillions divided by Ripple equals lots". Dumb.
There is only one mechanism that creates value: supply and demand. Supply is easy, it's the number of LIQUID coins that are immediately ready for trade; not speculator-Hedl coins, not escrowed coins, not lost coins, not burned coins, not reserve coins, not contractually-restricted coins, or any other conceivable condition by which a coin is not liquid, ESPECIALLY...dadadaaa... coins in flight (very important). The number of actual liquid coins is a very small fraction of all coins; literally, all the liquid coins are on some form of exchange, whether it be a conventional crypto exchange, a trading app on your phone, etc. It must be ready to move to count.
Most coins are locked up, I'd go so far as to say 95% of XRP are out of the market's reach, and therefore do not contribute to supply in the context of determining value. That leaves 5%, which is less than 5 billion XRP, and it's only THIS small pile of coins, that everyone needing to procure XRP, will be fighting over.
The "Demand" part of supply and demand, is an aggregate of many forces, but those forces all sum together at the point of purchase on an exchange. When demand is greater than supply, the price goes up; and vice versa. Demand for XRP will come from one thing, increasing usage. If I want to send my mother $150,000 worth of XRP, I will create demand. The more people buying their mother's shoe-shops, the more demand gets created.
You might say, well as soon as mom sells the XRP I sent her, we have a net zero situation and the price wouldn't change. Yes, you are correct, but if during my purchase, transmission, and mom's sale, someone else needs to buy some liquid XRP, there'll be less supply of them available, and the price will be higher. Extend this scenario to where hundreds of thousands of transactions are happening per hour, and you should see that a lot of liquid XRP has been converted to in-flight XRP, drying up the supply, and rapidly driving up the price because of scarcity.
In other words, the "volume" of XRP "utilization" trades (where XRP actually LEAVES one exchange for another for the purpose of value transfer, not speculative trading), will be what determines the basis for "real" demand, and it won't pay any attention whatsoever to said Market Cap. Demand is demand, and it will be satisfied at any cost. Higher volume, higher demand, higher price.
This isn't taking into consideration speculative valuations, this is literally the base value calculation driven by utilization alone, but I think we all know that speculative value is the 1000-lb gorilla in the room. Without speculation, XRP's value could never bootstrap itself high enough to reach the liquidity required for the banks to be able to use it in the first place. The higher we push XRP, the closer we get to bank adoption, and they'll take it from there.
Forget about how much SWIFT transfers in a day, or how much money there is in the world. The only number that matters is XRP utility-trading volume, and there are so many unknowns that contribute to this number that it makes no sense to even attempt an edumacated guess.
For example, Jevons Paradox will take any present day financial metrics and exponentially blow them through the roof. Instead of saying "SWIFT sends trillions per day so XRP must equal blah to handle it"; you need to think, well XRP will turn those trillions per day into trillions per...minute?
Yes, I'm not exaggerating. There's nothing we see today that can serve as a basis for the reinforcing effect that instant money-transfers will have on the economy, any more than a mailman from the days of the pony express could've estimated the number of global emails sent by people every day.
Death to Market Cap!!
Bullish
The difference between genius and stupidity is, Genius has its limits. Albert Einstein
AI
