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On bitstamp today, $1 = 225XRP. That makes 100 billion XRPs worth $450 million.
Ripple's a payment system that can't be used to buy anything yet and it's transaction credits are worth half a billion.
Am I missing something here? Why is the price so high?
Edit: The price doubled since I asked this question. Now total ripples are worth almost a billion.
Edit2: Ripple people: you can down vote this questions all you want. It's a perfectly valid question.
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Keep a few things in mind. Not all 80 billion XRP that OpenCoin is supposed to give away is already in people's hands. Also, the founders that kept 20 billion will probably not be likely to sell a big part of it. For this reason, the total amount of XRP in circulation is many times lower than 100 billion.
Beside that, it is true that the total market cap can be valued at 100 billion * 0.0044.. USD/XRP = ± 450 billion USD. But that number does not make too much sense because the price will drop very fast when people sell big numbers of XRP. The reason that the price has this (relatively high) value is because most people are not likely to sell their XRP and everyone wants to buy a little bit of them to experiment or to keep as an early investment.
The main reason why people buy XRP now is because they believe that Ripple has potential to become big some day. And possibly for development and testing purposes.
1"The main reason why people buy XRP now is because they believe that Ripple has potential to become big some day. And possibly for development and testing purposes." Given that you can't buy anything with Ripple at the moment, the price is set a 100% by speculation. – Emre Kenci – 2013-04-29T11:09:02.437
The amount of XRPs in circulation is another discussion. Assume all of it is in circulation. If nobody sells them, it's the same thing. Market cap of Ripples is still half a billion. The question was whether there is something wrong with my calculation? – Emre Kenci – 2013-04-29T11:11:33.523
3Your calculation is correct, but it makes little sense to calculate market cap of the total amount of currency when you can assume that the largest part of it will not be traded in the coming year. – Steven Roose – 2013-04-29T11:15:32.537
Do we know the exact number of XRPs that have been given away? Do we know the amount of XRPs out of the 20 bil. that the founders have sold? How can you make that assumption? Based on what data? Even if your assumption is somewhat accurate, it doesn't make a difference as it would be the same thing with majority of people hoarding XRPs. It makes a ton of sense as it allows you to conclude that the price is speculative and it will be inflationary. – Emre Kenci – 2013-04-29T11:33:41.437
"But that number does not make too much sense because the price will drop very fast when people sell big numbers of XRP." and "The main reason why people buy XRP now is because they believe that Ripple has potential to become big some day" These are conflicting arguments – Emre Kenci – 2013-04-29T11:35:01.803
They are not. In the first, the "when" is hypothetical, so if people would sell, the price will drop very fast, as the market depth is low. The second just gives my guess on the reason why people are currently buying XRP. – Steven Roose – 2013-04-29T13:22:16.057
So the price is high right now because people don't have big numbers of XRPs and therefore they cannot sell them. But once they do own large amounts of XRPs, they will sell them and price will drop. But other people are buying XRPs becuase they believe it's price will increase some day. So why are people buying now, instead of waiting for that decrease in value you talk about? So yes, you are self conflicting. – Emre Kenci – 2013-04-29T15:09:44.297
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According to coinmarketcap.com the market cap of the XRP is currently $606,293,939. However, according to a post in xrptalk.org 90.91% hadn't been moving as of the 17th of August. This would calculate to a liquid market of approximately $55Mio.
As more than 40% of the total XRP are still announced to be spread into the market, the value of XRP is bound to strongly fluctuate and should at this point be considered unsuited for storage of wealth.
Unlike the question suggests, the Ripple network is connected to the Bitcoin market and therefore can be used to pay at any shop that accepts Bitcoin payments. The source code of the server software has yet to be released though, so that even impartial parties suggest to wait before pouring value into the market.
Arguably the market cap of Ripple doesn't only derive from the value of XRP, but all different currencies that are being moved through the ripple network. Unfortunately, I have yet to find numbers on other liquidity and balances in the system.
"90.91% hadn't been moving as of the 17th of August" Doesn't mean that they could not be sold. I have ripples that I never moved either. This does not mean that 90.91% were not in the market. – Emre Kenci – 2013-09-05T06:26:44.017
@AntonAnsgar: As I said, they weren't moving. You were the one that came up with the suggestion that this meant they weren't part of the market. Further, concerning the possibility to buy goods with ripple, a) your statement in the question is provably false, b) as Bitcoin were not part of your question, your second comment is irrelevant, although it may be true, and c) complaining that you can't fund a ripple wallet with bitcoin is like complaining that you can't pay taxes in the US with Euros... – Murch – 2013-09-05T12:32:40.333
No need for metaphors. If you can't fund your Ripple wallet with Bitcoin, you can't use Ripple to pay with Bitcoins. – Emre Kenci – 2013-09-06T07:49:07.660
I was pointing that that fact that they were not moving has nothing to do with price being high. If 90% of xrps were NOT available for trading, that would be meaningful in understanding the price level. But they were available for trading. So you can't use that argument for explaining the high price. – Emre Kenci – 2013-09-06T07:51:05.197
You can't have Bitcoins in your Ripple wallet, because it is not a Bitcoin wallet. However, you can have Bitcoin-IOUs. You can also use a balance in any currency traded in Ripple to pay BTC to a Bitcoin address via the Bitcoin bridge. – Well, the unmoving XRP might be nominally available, but they are defacto not available on the market. As I said previously, I'd consider XRP a poor medium for value storage, as the remaining XRP will be made available at an unknown pace. All the points that you keep churning fanatically have been addressed. Please start adding something new. – Murch – 2013-09-06T12:23:53.297
No no. You keep raising an invalid point. Not moving is not is not equal to cannot move or not available for trading. It just means people were not selling. Its not the same thing with say "11m bitcoins have been minedand there are 10 more that will be mined in the future but those are not available to anyone atm" ıf that was the case it would effect the number of xrps in circulation. But that is not the case here. Get it? I doubt it – Emre Kenci – 2013-09-06T16:47:22.567
I guess we'll have to agree to disagree there. My understanding of OpenCoin's position and proposal leads me to the conclusion that it is not in OpenCoin's best interest to liquidate too many of their XRP too quickly. They cannot magically trade their XRP for the nominal market cap. If they would make any significant portion of it available the value would plummet without recovery. Should they actually be motivated by getting rich through their investment, they'll first have to build a market that has enough depth to pay them out. So, yes, the XRP are there, but they will not be available. – Murch – 2013-09-06T17:59:37.553
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According to Ripplexrpprice.org and coinmarketcap.com today's market cap is $15,013,462,946. Many big institutions and banks are doing partnership's with ripple for low cost cross-border payments.
I can say that Ripple's market cap which is on today is cheaper to buy because in the future it will be more expensive.
No, the -1 came from a troll who downvotes every ripple question. – o0'. – 2013-04-29T18:37:10.653
3That said, this is really not a great question, and way too much biased. – o0'. – 2013-04-29T18:39:22.537
1Why? What is the bias? I think it's perfectly normal to look for a logical explanation to this mind blowing number. – Emre Kenci – 2013-04-29T21:14:32.607
3"Ripple's a payment system that can't be used to buy anything yet" this is totally a rant. – o0'. – 2013-04-30T08:19:53.163
It is a fact. And it supports the question. – Emre Kenci – 2013-04-30T10:31:40.000
"Ripple's a payment system that can't be used to buy anything yet" is false, as for example here a Microsoft Surface RT was sold for 13k XRP. My interpretation is that you want to call attention to your concerns about Ripple, which as commendable as it may be is neither part of the question's topic, nor is SE the correct platform for that. – Murch – 2013-09-05T12:40:26.837