What to Know:
- XRP’s unique design as a global liquidity engine supports potentially high valuations based on utility and global demand.
- The divisibility of XRP into tiny units (drops) ensures usability at any price level, facilitating both micro and macro payments.
- As XRP adoption increases, its value will be driven by real-world usage, such as transaction speed and liquidity needs, rather than speculation.
XRP’s long-term valuation remains a hot topic within the crypto community, with some analysts suggesting unconventional factors could drive its price significantly higher. One perspective, offered by Versan Aljarrah, co-founder of Black Swan Capitalist, posits that XRP’s design as a global liquidity engine makes high valuations a mathematical outcome tied to utility and global demand, not mere speculation. Understanding the nuances of the XRP Ledger is crucial to grasping its potential.
One key feature of XRP is its divisibility; each XRP can be divided into 1,000,000 drops. This allows XRP to remain practical at any price level, whether it’s $0.50, $500, or $50,000, as transactions occur in these smaller units. Higher valuations can actually improve efficiency, reducing volatility, slippage, and settlement times, which are critical for institutions and global payment corridors.
Aljarrah also points out that the actual usable supply of XRP is smaller than the total 100 billion due to long-term holdings and institutional reserves. Considering the trillions of dollars that move daily in FX markets, global derivatives, and cross-border payments, even handling a fraction of these markets would necessitate a higher per-unit price for XRP to balance the network. Banks and institutions only need fractional drops of XRP to settle transactions.
As XRP gains traction in bank systems, tokenized markets, and international finance, its value is expected to shift from speculation to real-world usage. Factors such as transaction speed, liquidity needs, and the value it transfers will become the primary drivers of its price. This positions XRP as a potential global currency rather than just a trading asset.
Source: Original article
