Western Union Considers Using Ripple - But Does Anyone Really?
In the run-up to the start of 2018, Ripple XRP was hitting headlines on an almost daily basis.
Santander announced that it was partnering with Ripple. Westpac in New Zealand then decided to adopt Ripple blockchain technology. Toward the end of the year, none other than American Express then announced a partnership with the San Francisco based company.
Why Ripple XRP is far from Investor Friendly
Given the level of institutional support which Ripple benefits from, it’s not hard to see why the digital currency is so appealing to some investors. Sadly, despite the likes of Western Union now starting to use Ripple's blockchain technology, XRP itself is still struggling to keep its head above $1.15 in value.
As for why XRP's price is less than half of its December value, the reason is simple. Put simply, not a single institutional adopter of Ripple’s blockchain technology has plans to start using XRP digital currency tokens themselves.
Ripple XRP’s Big Digital Currency IOU Problem
What many investors don’t realize, is that Ripple as a payment network doesn’t need any form of digital currency to operate. Instead, banks and payment processors can use what are essentially digital IOU’s to settle transactions. What is more, this makes XRP as a currency completely redundant.
How Does Ripple XRP Plan to Monetize XRP?
At present, Ripple’s value rests solely with the transaction processing capabilities of the Ripple blockchain. Unlike the Bitcoin blockchain which can only process 6-8 transactions per second, Ripples blockchain technology can settle thousands. As a result, Ripple believes that the more widely adopted its technology becomes, the more valuable XRP tokens themselves will become.
Why Ripple’s Hypothesis Simply Doesn’t Make Sense
Because of the way in which Ripple attributes value to XRP tokens, investing in Ripple is a little like buying shares in a private company. As it stands, however, investing in Ripple’s blockchain technology raises some serious issues in itself.
As of February 2018, Litecoin, Dash Coin, DigiByte, Cardano, and even Bitcoin (by virtue of Litecoin’s Lightning Network), can all compete directly with Ripple’s 1,000 transactions per second processing power. Much more importantly, digital currency investors are being increasingly deterred by coins without robust use cases.
Might Ripple XRP Surge in Value in 2018 Regardless?
In mid January 2018, Ripple CEO Brad Garlinghouse, tweeted that banks and payment providers are “indeed planning to use (XRP) in a serious way.” This being the case, it is possible that Ripple will surge in value at some point in 2018. Such a surge, however, will only take place if banks and payment processors really do start using XRP. If they don’t, XRP itself will remain essentially valueless.