I posted this in a private Discord group last week. I'd like to preserve this from being lost forever, so I'm posting here. Feel free to read, disagree, agree, or disregard entirely.

The Premise

Anon user: Guys think about XRP. It works with banks to send money from bank to bank right? People in the crypto world are saying, "hey this goes against the decentralizing that crypto aims to target." But at the end of the day XRP is a stepping stone towards the fully decentralized world.

Me: I mean, technically speaking, who cares if it is going to decentralize or help decentralize anything. This is technology that will save banks big $$$.

The issues I have with XRP isn't "purist"...

1. Total XRP Supply

Let's start with this: Ripple owns 2/3 of total XRP supply. That isn't too comfy. Especially when you consider the next point:

2. Artificial Liquidity

They (Ripple) are currently fighting Bitcoin, Etherium, & other top cryptos with artificial liquidity. It can't, and won't last forever.

3. The Global Reserve

Some people think XRP is the bank's attempt to grab crypto from the people.

LOL no.

This is really just XRP's attempt to show banks they can rival the global reserve. I don't believe that XRP will ever become the global reserve.

Okay, so liquidity and global reserve aside, the technology is great, but XRP would then become nothing more than a bridge currency.

4. The XRP Velocity Problem

If the above (3.) holds true, and Ripple is a bridge currency, it should fall victim to the velocity problem. Here is an excellent article detailing the token velocity problem. To quickly summarize, if there is no reason to hold onto a token or coin, it will not appreciate in value.

An illustration for the mathematical folks:

Velocity = Total Transaction Volume / Average Network Value

Therefore:

Average Network Value = Total Transaction Volume / Velocity

An example in action

You want to go see Deadmau5 live. Turns out, you need a TIX token/coin to buy a concert ticket (the concert company is using a blockchain to prevent fraud). So, you will:

1. Use ETH to buy 1 TIX.
2. Redeem your TIX for the concert.
3. Receive your concert ticket

There is no reason for you to hold the TIX token. You just need it to act as a short-term "middleman" to ensure you get into your concert. The TIX token will have no reason to appreciate in value.

In my opinion, I don't see a reason why banks would want to hold on to XRP (unless they adopted it as a global reserve).

5. The Technology Will Be Available Before Crypto Stabilizes

Okay, just for argument's sake, let's say banks actually wanted to adopt XRP as a global reserve.

Crypto is too volatile right now. This is so incredibly obvious.

XRP (and the rest of the crypto world) would need to "settle down first." The availability of the technology is going to arrive much faster than the stability of the crypto-sphere.

6. No Bank Actually Wants XRP. The Only Reason For Adoption Is Incentivization By Ripple.

What bank wants to risk holding an asset that could fluctuate 20% in one day? Banks just want the speed and infrastructure of Ripple, not to "hold the XRP".

7. No. Banks Are Not Going To Buy Your Damn XRP Bags.

With 2/3 supply of XRP locked up, its not like banks are gonna go to Binance and start buying up people's XRP. They'll make a private 1:1 deal with Ripple.

For some reason I keep seeing people thinking that they're going to own a crypto that the banks are gonna come buying one day.

Nah. Doubt it.

8. XRP Was Designed to Settle Liquidity Needs Between Banks

You knew that, right? Okay, good. Just checking. (src)

If XRP is being used to settle liquidity between banks, there's no way they would do it based on current market value.

I don't want to repeat myself, but the prices of cryptos are known to fluctuate up to 50% or more in a single day. Not to mention, arbitrage is still possible between some exchanges. (There are up to 20% variations between some exchanges.)

A bank wouldn't want to hold XRP unless they knew the value would be stable. Find me 1 bank that's okay with receiving 1 mil in a currency that could drop even 10% in a day. Nah.

BUT, BUT, BUT, XRP is really, REALLY fast, and value can't fluctuate very much in the 3-5 seconds it takes for XRP to send & confirm!?

So that's where the speed comes in again. The speed of the transaction will take care of fluctuation.... XRP probably won't fluctuate too heavily for 10 seconds. But, then, we're back to the fact that if no one is holding it, it won't appreciate.

---

What do you think? Please tell me why I'm wrong in the comments.

I am not an XRP expert, I just like to argue. (When someone makes an opinionated remark, I'll probably argue against it. None of this article should be taken as financial advice.)