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If you carefully study the market trend of XRP since 2019, you will find that even though BTC, ETH and the entire cryptocurrency market have risen and fallen several times during the same period, XRP has been hovering between US$0.2 and US$0.5.
In addition, the centralization and inventory issues of XRP are extremely topical. Compared with other cryptocurrencies, the price of XRP has always been tepid, so it has been ridiculed as “unable to support the dou”.
“Is XRP a stable currency?” Many users raised this question.
However, in the past week, XRP has risen by more than 200%, and its market value has surpassed USDT, regaining its third position in the world.
Just today, it has risen all the way from 0.44 U.S. dollars to a maximum of 0.79 U.S. dollars, creating a “myth” of a single-day rise of more than 58%.
With Yiqi Juechen’s gains, XRP naturally also attracted investors’ attention and FOMO.
Although the rise of XRP is related to the positive release of Ripple, it is worth noting that XRP (Ripple) cannot be equated with Ripple (Ripple).
During the triumph of XRP, Ripple, which “sell coins for a living”, never stopped selling XRP.
Ripple, a company that “sells coins for a living”
XRP was issued in March 2013 and started trading in April 2014. The initial total issuance is 100 billion pieces and the issue price is 0.0000007 yuan.
Nowadays, the price of XRP is about 4 yuan, which has increased by 5.7 million times in 6 years. In other words, if a user bought XRP for 1 yuan in 2014, it can still be exchanged for 5.7 million yuan. If the user chooses to sell at the highest price of 25 yuan in history in 2018, it can now be exchanged for 35.71 million yuan.
However, if you want to understand XRP, you must first understand the Ripple company behind XRP.
Simply put, this is a company that makes a living by selling coins.
In 2020, Ripple’s Q3 quarter total sales were 35.84 million U.S. dollars and Q2 quarter was 32.55 million U.S. dollars. Among them, a considerable part of the profit is earned by Ripple selling coins.
All of this is due to smart contracts in May 2017, when Ripple launched a new feature Escrow, gradually releasing XRP through third-party custody.
ESCROW, also known as escrow, is a payment method in which the buyer pays the purchase price to a third-party escrow other than the buyer and the seller. Specifically, XRP is used in transactions, which means that Ripple transfers the XRP to be sold to a third-party escrow and sells it regularly.
The official explanation for this is that XRP has always been questioned as being too “centralized” in holding positions. In this case, Ripple simply “decentralized” and continuously releases XRP through Escrow.
In December 2017, Ripple put 55 billion XRP into 55 Escrow’s escrow contract accounts, each account was 1 billion XRP, unlocked a escrow contract account on the first day of each month, open for enterprises to buy, and XRP that has not been purchased that month will be put back into the new smart contract.
Through this mechanism, Ripple will sell up to 1 billion XRP each month starting in December 2017.
However, on-chain data shows that Ripple actually sells more XRP than reported.
According to Ripple’s announcement, the number of escrow smart contracts should be 55, each with 1 billion XRP, for a total of 55 billion.
The data provided by CoinMetrics shows that there are actually 85 custodial smart contracts. Although the total number is 55 billion XRP, the number of smart contracts is different from the official announcement. The actual situation is:
25 smart contracts, each with 1 billion XRP, will be released from January 2018 to January 2020.
There are 60 smart contracts with 500 million XRP in each contract. From February 2020 to July 2027, two custodial smart contract accounts will be released every month.
In addition, the on-chain data detected by CoinMetrics is also different from the market report released by Ripple every quarter.
In the third quarter of 2018 and the first quarter of 2019, in the quarterly reports released by Ripple, the amount of XRP hosted by Ripple was higher than the amount indicated by the data on the chain, which means that Ripple actually sold more XRP than announced. The difference is 200 million XRP, worth about 80 million US dollars.
Coincidentally, in 2019, Florent Moulin, an analyst at the blockchain research organization Messari, published the “Complete Research Report on XRP Circulation” on Twitter, stating that the XRP team’s token selling pressure was underestimated, and the official XRP circulation data was consistent with Actually does not match.
According to the report, according to on-chain data, XRP circulation has increased by 11.5% in the past six months, but Ripple’s API data shows 4.5%.
On January 24 this year, Messari released a report stating that the market value of XRP may be overestimated by $6.1 billion. After the report was released, Ryan Selkis, CEO of Messari and co-founder of Coindesk, even stated that he had received a threatening call from an anonymous person.
We have no way of knowing whether the anonymous person is a Ripple person, but what is certain is that Ripple does have false reports and underreports regarding the XRP selling.
Why does XRP skyrocket?
In the past month, the price of XRP has increased by 156%, and it is also the currency with the highest increase among the top ten currencies by market value.
The reason why XRP can rise this time, first of all, is because under the strong market of BTC and ETH, most of the project parties and investors of stagflation mainstream currencies have more and more strong demands for the currency price.
Recently, Ripple revealed that it had repurchased $45.55 million worth of XRP in the third quarter, and announced that it will continue to increase repurchase efforts in the future to boost the price of XRP.
Regarding the previous token sale behavior that caused extreme dissatisfaction with the community, Ripple officials also explained: Most of the XRP sold before were locked by customers of the ODL platform, and only a small part went to the secondary market. This move is aimed at improving the liquidity of XRP. , And will not cause inflation.
ODL, the full name On-Demand Liquidity, refers to on-demand liquidity, and its predecessor is XRapid, one of Ripple’s products. The payer first converts the payment into XRP and sends it to the recipient’s bank. The bank converts the received XRP into the corresponding currency, and then pays the payment to the corresponding recipient.
In fact, Ripple’s repurchase has been completed in the third quarter. The reason for choosing to release the benefits at this point is that market value management can only achieve a multiplier effect with less effort if it is conducted in a favorable market environment.
Therefore, behind the frequent release of XRP’s benefits, it is actually a signal that the mainstream currency market is picking up.
In addition to the positive market conditions as a whole, Ripple’s recent leaps and bounds is also an incentive for XRP to rise.
It is understood that on November 11, Ripple and US banking giant PNC reached a strategic cooperation, PNC will use XRP as a payment product.
Coincidentally, Ripple and blockchain company Flare Networks plan to release a new token Spark based on XRP Ledger in December.
At that time, XRP investors can claim a free Spark token for each XRP they hold on December 12. With Spark, users can use their tokens to issue and exchange FXRP tokens (FXRP tokens are the gas for running smart contracts on Flare), thereby generating returns.
In addition, on November 14 this year, the United States Patent and Trademark Office submitted documents showing that Ripple has applied for a new trademark called “PayString”. It is not yet clear which product the trademark will be used for. In the introduction of the application, “electronic financial services: the exchange of legal currency and virtual currency between networks and the reception and transmission of remittances” as an example.
The exciting combination of new developments in cooperation, XRP repurchase, token airdrops, etc. may be the main factor behind XRP’s recent rise to a 16-month high.
As early as the end of April 2017, XRP ushered in its first big rise since its birth. At that time, XRP jumped slightly from the previous US$0.005 and rose to about US$0.05 on April 30. Then, On the following day, XRP continued to explode and once rose to a maximum of $0.34. After that, although the currency price has fallen, it has remained above $0.15.
One after another, XRP skyrocketed 30 times.
Then came the big bull market in 2017. At that time, BTC rose to a historical high of US$20,809, and XRP was not to be outdone. It skyrocketed from US$0.28 to a record price of US$3.84.
However, after that, the price of XRP began to fall. Although there were several rises in the middle, the final currency price remained stable at between US$0.2 and US$0.5 for the next two years.
Until May 14 this year, BTC broke through $8,200, and XRP strengthened, with a single-day increase of more than 37%.
The reason why XRP has such a paradoxical market trend, to a certain extent, has a great relationship with the background of XRP and the Ripple company behind it.
First of all, we need to make it clear that XRP (Ripple) and Ripple cannot be equated.
In Ripple’s product system, there are three major products, xCurrent, xRapid and xVia.
xCurrent is Ripple’s flagship product, which mainly provides cross-border transactions between banks. Ripple has set up a distributed ledger between banks. Whenever bank A transfers money to bank B, it can be cleared by intermediate bank C, so that A The amount in the bank account opened by C and the bank account opened by B in C has changed.
The advantage of xCurrent lies in its faster settlement speed and low cost. At present, more than 200 banks around the world cooperate with Ripple to use xCurrent for international settlement. According to calculations, using xCurrent, banks can reduce capital costs by up to 33%.
But please note that all of this has nothing to do with XRP. In the use scenario of xCurrent, XRP is not needed at all.
In various news, there are often news that Ripple cooperates with major international banks. Investors think this is good news for XRP. However, in fact, when you hear a bank announces the adoption of Ripple’s system, they are actually using xCurrent , Has nothing to do with XRP.
The only product that can use XRP is xRapid, which has now changed its name to ODL.
In this scenario, XRP has become a medium for fund conversion, but banks don’t seem to like this product. If the price of XRP fluctuates greatly, it will cause exchange losses. Therefore, the most ideal state of XRP is to maintain a “stable coin” state for a long time.
This is why the price of XRP has been stable for a long time between US$0.2 and US$0.4. Because, for banks, they have no incentive to hold XRP, which is not an investment project for them, but just a medium for fund transfer operations.
And in order to reduce price volatility, banks will try their best to hold the least amount of XRP in the shortest time, as long as the cross-border payment is completed.
They don’t care whether XRP is worth 5 yuan or 50 yuan. Only Ripple and the retail investors who hold XRP care about the currency price.
The main purpose of xRapid or ODL is to give XRP value, so that XRP will not become air. In the future, whether XRP can truly create value depends entirely on the development of xRapid.
XRP, which has taken advantage of the momentum, will continue to rise in the future following the pace of mainstream currencies such as BTC, or will soon return to the “stable currency” range of $0.2 to $0.5, there is still no answer.