Will Ripple Overtake Bitcoin? A 2018 Forecast for “3 Large Virtual Currencies” Including Ripple
Ripple (XRP), temporarily reaching a market value of 121.8 billion dollars, became the world’s second-largest virtual currency, after Bitcoin. Although Ethereum, below Ripple, is making a comeback, there are many reasons to believe Ripple’s value will rise even further. These include the currency’s partnerships with international financial institutions and governments and the commencement of transactions at Dubai’s virtual currency exchange – where affluent investors of the Near and Middle Eastern regions gather.
Let’s try to predict the future prospects of the three largest virtual currencies: Bitcoin, Ethereum and Ripple, whilst also exploring the reasons behind Ripple’s growth.
Ripple recaptures 2nd place, prices more than 400 times higher than 9 months ago
Ripple’s independently-developed XRP is one of the virtual currencies that is now drawing the most attention. As interest in the currency rises, price fluctuations get intense, and the more price fluctuations intensify, the more attention the currency garners.
Ripple itself provides a gross settlement system using blockchain technology, and a foreign exchange/international remittance network.
The price of XRP, which was 0.006 dollars in March 2017, suddenly rose to 0.35 dollars in May. Although it fell to 0.24 dollars in early December, rising again with violent force soon after, it broke through 2.23 dollars (a 55.9% increase) on the afternoon of the 29th. Pushing up its market capitalization to 86.3 billion dollars, it became the world’s No. 2 virtual currency, outdoing Ethereum at a market capitalization of 73 billion dollars.
The market’s wild enthusiasm accelerated further, with the currency scoring a high price of 3.22 dollars on January 8, 2018. It dropped back slightly within the same day, but it maintained at approximately 2.50 dollars. In terms of market capitalization, Ethereum has been making a comeback to 2nd place (CNBC, CoinMarketCap data).
With the background of these recent price increases, there are reports related to transactions at Dubai’s virtual currency exchange, BitOasis. There is a sense of expectation that “by broadening its scope to affluent investors of the Near and Middle Eastern Regions, the price of Ripple should spring up explosively.” Also, reports that financial institutions are expressing interest in Ripple, and concerns related to the world’s largest virtual currency Bitcoin occupying 41% of the market share, are sure to become factors influencing the wild enthusiasm towards Ripple.
Ripple, set up jointly by angel investor and Stellarcoin founder
Ripple was founded in San Francisco in 2012. Through a number of fundraising rounds, it acquired a total investment of 93.6 million dollars (October 2012 – June 2017) from major international venture subsidiaries GV and Santander InnoVentures, and Accenture, Blockchain Capital, Venture 51, etc.
What became its parent was the “Ripple Project” devised by distribution system developer Ryan Fugger in 2004. In 2012, Silicon Valley’s angel investor Chris Larsen and well-known programmer Jed McCaleb founded Opencoin in a bid to overtake Ripple. Jed McCaleb is also known as the developer of “eDonkey,” a file sharing system that was once very popular in the West, the founder of Stellarcoin, and the person who opened a Bitcoin exchange Mt. Gox, which went bankrupt in 2014.
Opencoin, which succeeded in raising funds from GV, IDG Capital Partners, Bitcoin, Opportunity Fund, etc. twice in the following year (via CoinDesk), developed the Ripple Protocol (RTXP) and its own settlement/exchange network, with McCaleb’s resignation as the opportunity.
Renaming the company to RippleLab in 2013, it again changed names to the current Ripple in 2015. Before the renaming, it seems that there was sometimes confusion between this company and the similar virtual currency project “OpenCoin.org”, but the two organizations are completely unrelated.
Partnerships with major international financial institutions to accelerate
Ripple’s acceleration started around this time. In 2016, apart from acquiring a virtual currency license from the New York State Department of Financial Services, it jointly founded the Global Payments Steering Group (GPSG) with the Bank of America, the Royal Bank of Canada, and major European financial institutions such as Santander Bank and UniCredit. Its purpose is to set international standards around using Ripple’s technology. Subsequently, Japanese financial institutions such as Mitsubishi Tokyo UFJ Bank also announced their participation.
Furthermore in 2017, partnering with Spanish industry leader BBVA, it accomplished the feat of completing cash remittances between Mexico and Spain “in mere seconds” using Ripple’s blockchain technology (CNN). Also, integrating American Express’s international payment platform “FX International Payments” with the company’s blockchain network, it is also aiming to speed up international settlements between the USA and the UK.
If the price rises by 167%, will it surpass Bitcoin?
As can be understood from the above explanation, Ripple’s greatest strength lies in the fact that it has formed powerful partnership relations with governments and major international financial institutions.
Apart from Larsen,who has currently assumed office as president, having been appointed the managing director of the FinTech Advisory Group ” High-Level Advisory Group on FinTech” of the IMF (International Monetary Fund) in 2017, Ryan Zagone – director of Ripple’s regulatory-relations department – has been selected as a member of the Faster Payments Task Force Steering Committee formed by the Federal Reserve Board in 2015. Of course, there are also expectations from the technical side – but there is no doubt that the background here is being reflected in the price of XRP. In any case, will there be opportunities to surpass Bitcoin?
38.73 billion XPRs are circulating in the current market. Ripple’s January 9 price is 2.49 dollars, and its market capitalization is 96.4 billion dollars. In comparison, Bitcoin’s market capitalization is 254.2 billion dollars. For XPR surpass Bitcoin, it is necessary for its price to reach 6.57 dollars (a 167% increase). Considering that it has recorded an increase of 36,000% even in the last year alone, it is highly possible.
How about Ethereum? The number of coins circulating in the market is 96.85 million, its price is 1119 dollars and its market capitalization is 108.3 billion dollars. Just to raise the price by 134% would be to outrun Bitcoin (via CNBC).
Is Bitcoin an “investment”? A “bubble”?
Bitcoin, even while sensing the threat of Ripple and Ethereum, is maintaining an overwhelming market support. The price peaked at 19,000 dollars (market capitalization 318.3 billion dollars) in mid-December last year and has now settled at approximately 15,000 dollars.
Some see these figures as a bubble, ripe to burst, many are voicing their concerns about a price collapse in 2018. Reuters, in its predictions for the economic market this year, has announced “regulations strengthening in every country/region, chilling investments, the price greatly slumping from the current 16,000 dollars to 1000 dollars” as the worst-case scenario.
On the other hand, the current of reacting positively with “virtual currency is our future” is also strong. The expectation that “it will break through the wall of 100,000 dollars in the middle of this year” also seems to be common among some investors.
Patrick Dai, the founder of the hybrid virtual currency Quantum (Qtum), said to “have the best of Bitcoin and Ethereum”, identifies the lack of societal understanding towards virtual currency or blockchain technology as giving rise to the “bubble” viewpoint.
Factors that are capable of having an effect on Bitcoin price?
There are several factors which have the potential to have a serious effect on the price of Bitcoin.
For example, according to a law concerning communication networks – “Metcalfe’s law” – “the value of a network’s communications is proportional to the square (n2) of the number of users in the connected system”. This law was defined in 1993 by American investor George Gilder and characterizes communication technology and networks. Assuming that Metcalfe’s law also applies to Bitcoin, the price of Bitcoin should increasingly raise itself.
However, the more virtual currency diffuses, the more the number of rival virtual currencies can be expected to increase. Actually, virtual currency is in a trend of yearly increase and has exceeded 2640 varieties in terms of just those listed in coin rankings as of January 2018. Including Ethereum and Ripple steadily growing in popularity as mentioned above, Cardano, Litecoin, IOTA, etc. have also been gradually gaining on them.
Additionally, the effects from regulations also weigh on the mind. Although the interaction methods may differ for every country/region, the lack of unity is capable of spurring the market’s anxiety.
Issues such as transaction problems and proof-of-work (PoW) concerns – which are still yet to be resolved in Bitcoin – also lie ahead for other currencies. (via Investing PR).
Bitcoin something like DOS, Ethereum something like Windows or Mac OS?
Predictions that “2017 Bitcoin, 2018 Ethereum” are very common.
Jez San, CEO of FunFair Technologies, which provides an Ethereum-based casino platform, compared Bitcoin to DOS and Ethereum to Windows or Mac OS, indicating the fact that in spite of DOS making an entry into the market first, its popularity slowed greatly when the newer models started appearing. Like for Windows and Mac OS, developers are working on thousands of Ethereum-oriented applications in competition with Bitcoin.
San, saying that Bitcoin has already “ended up becoming a high-priced investment product that only the elite get involved in”, sees that ordinary investors should switch to other virtual currency which are low-priced and from which they can expect future returns. It seems that even among them, virtual currencies that have a strong sense of having already established themselves in the market, such as Ethereum and Ripple, will attract the interest of even more investors (via DeskCoin).
The possibility of “Ripple becoming a large hole” cannot be denied. Or a completely different virtual currency may spring out onto the top of the charts.
Central banks to start buying virtual currency?
Peter Smith, CEO of London Bitcoin platform startup Blockchain, even said that “this year, it will be that central banks hold Bitcoin and Ethereum” in a CNBC interview. If realized, virtual currency should spring up with hitherto unseen force.
Also, Eugene Etsebeth, the former banker at the South African Reserve Bank, also prophecizes that “this will become the year where the market capitalization of virtual currencies including Bitcoin will exceed the value of every conventional currency” (via CoinDesk). It is the view that, with the popularity of virtual currency heating up in the world, and the advantage of being able to transact 24 hours/365 days from anywhere, central banks will buy in virtual currency.
Of course, these various “prophecies” are only within the range of speculation. However, is the popularity of virtual currency transient, or is it a new investment target? 2018 might become the year where everything becomes clear.