
Ripple co-founder fifth richest person in US, rivaling Zuckerberg - rmason
https://www.nytimes.com/2018/01/04/technology/bitcoin-ripple.html?rref=collection%2Fsectioncollection%2Ftechnology&action=click&contentCollection=technology&region=stream&module=stream_unit&version=latest&contentPlacement=9&pgtype=sectionfront
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hendzen
As said by others, market cap is not enough. There needs to be a better metric
that takes in to account "true" market depth. I say "true" b/c the market
depth on CC exchanges is generally accepted to be BS due to widespread
spoofing/wash trading.

Basically, the total market value of the coin should be the maximum USD (or
any other reference currency) that could be extracted by continuously selling
(an unbounded amount) of the coin until the price approaches 0.

~~~
candiodari
Really ? Why ?

The price for any good is the marginal price. Essentially it's the price that
should get paid for having a "single item" of the good change hands. Take a
stock. MS stock may be quoted at 80$, but I guarantee that if you want 50% of
MS stock, you'll have to pay more than 80$ per share.

So prices for large or much smaller quantities of the good change hands are
different, and are not quoted unless required. (smaller than one would be
still one, but only selling after the seller has to wait a long time). Since
such transactions often substantially change the demand for the good, the fact
that such a transaction exists often substantially changes the price.

This is true for cryptocurrencies, stocks, cars, shavers, toilet paper.

~~~
hendzen
The point is that marginal price is easily manipulated, when the good is
easily electronically traded. Stock trading is heavily regulated (& companies
can issue more shares if demand is very high) which prevents the massive
amount of manipulation we see in the CC space. Shavers/cars/toilet paper have
higher transaction costs and aren't typically seen as assets with which to
speculate.

This manipulation makes the marginal price a potentially bad way of ranking
different assets, especially when the market depth of the asset is relatively
thin (i.e. on many CCs).

The point of the metric I gave was that it is more robust of a measure to
manipulation than market cap. What do you think is the "value under
liquidation" [0] (VuL) of XRP? BTC? probably significantly less than the
market cap. The more interesting thing to do would be to try to estimate it
for different cryptocurrencies and compare them (i.e. XRP vs ETH). That would
be fairly difficult though, but perhaps an upper bound could be estimated,
better than the trivial upper bound of market cap which assumes that the
market impact of selling is 0.

[0] -
[https://cims.nyu.edu/~almgren/papers/optliq_r.pdf](https://cims.nyu.edu/~almgren/papers/optliq_r.pdf)

~~~
candiodari
> The point of the metric I gave was that it is more robust of a measure to
> manipulation than market cap. What do you think is the "value under
> liquidation" [0]

The market cap of Google is 780 billion.

The value under liquidation of Google is (you can find this in their financial
reports) ~100 billion. Even that is a vast overestimation of what it would
fetch in a firesale, because it's assuming, for example, that with Google
firesaling, the ad "inventory" would sell for what it's currently selling for.
(There another 70 billion in "intangibles" (guess how much that fetches in a
firesale)).

Granted that's pretty high (a company that pays dividends, like Microsoft,
it'd be way less, and for insane stocks like Amazon ... let's not go there).

Which do you think reflects the value of Google ? It's an interesting
question, and you can if you like get a bachelor, masters or PhD in various
ways to answer that question.

But I would say there is no one good answer. Not for XRP, BTC, or for Google,
not even for things like the US Dollar.

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davidbhayes
How is this anything but a bubble? I'm a bit of a Luddite on the whole area of
cryptocoins, but I literally first heard of Ripple three days ago. I can't
fathom how the entire corpus to them could be more valuable than whatever
portion of FB Zuckerberg owns.

~~~
cryptoz
> but I literally first heard of Ripple three days ago.

I haven't heard of nearly 100% of the world's billionaires or many of the top
companies by market cap in the world. That doesn't mean they are bubbles. I
haven't even heard of many of the world's currencies. They aren't bubbles
either.

Ripple is 6 years old. So many other businesses have started and become huge 6
years later and not been a bubble. Was Google a bubble when it was worth tens
of billions 6 years after it started?

~~~
metafunctor
That's the point, with a credible currency you don't need to know the people
or companies you're trading with. Instead of peers, you trust that the
currency used for trading is somewhat stable — so it makes sense to trade
using that currency.

With a single company to trade with, or a tiny cryptocurrency, you are trading
with a very, very small fraction compared to an established global currency.

I find it amazing that people are not getting this.

~~~
candiodari
Oh if only this were true. Just so we're clear when you say "established
global currency", what you're saying in practice is "SWIFT" (and a few
"competitors").

Ok, so one of the problems things like bitcoin solve is that trust in the
currency really encompasses trusting quite a few organisations, and these
being trustworthy is only true up to a certain transaction size, and only on
large averages. Basically, the issue is that banks can't be trusted, and
therefore anyone big enough to make double-digit million value transactions
can't be trusted (because they might be the bank, own the bank, or simply owe
the bank a lot of money, ...). There are also more complex cases where
governments get involved and muck things up (financial fraud, bankruptcy
cases, tax investigations, ...). And there are other cases (terrorist
financing, sanctions, ...).

All of those problems should not be the concern of merchants, but they are in
practice, because governments have unilaterally decided that interfering
without recourse in payment systems is the way they'll police the world. So
they change payment streams (which are between 2 parties, say A and B, and
they have some problem with A). Issue is always the same: B buys something
from A. One of the parties in the chain, or a government, or the police, or
... has a bill for A, and halts the payment. A then claims (truthfully) non-
reception of funds and refuses to deliver. B is left without recourse, without
money, and without the good they paid for. Needless to say, nobody accepts
responsibility for damaging B. But it gets worse.

So in fact this is one of the big advantages of cryptocurrencies, actually.
With dollars (or any such currency), even if they're on your bank account they
can disappear months later.

Essentially, large banks, judicial system and governments have the ability to
impose their losses on others, in the "traditional" currency systems, and they
use that ability too much, without caring who else they damage in the process.

When it comes to "if I have the money, I can trust that I actually have it"
cryptocurrencies (all of them) are far superior to SWIFT (essentially all
banks are part of SWIFT) in terms of what merchants consider trustworthiness.

There are other advantages that they also have. For instance, despite the
complaints, bitcoin is still far faster than SWIFT.

~~~
skewart
> Basically, the issue is that banks can't be trusted,...

And crypto exchanges, and all the other intermediaries you'll probably end up
dealing with in practice, can be trusted?

I get the usefulness of a decentralized permissionless network for peer-to-
peer transactions. But Bitcoin and most other cryptocurrencies today are
looking pretty darn far away from that promise.

~~~
candiodari
Comparatively I still believe they're more trustworthy than the fiat currency
ones. But that doesn't really matter in practice :

As long as your assets are in the cryptocurrency itself, and you're happy with
that, there is no need to trust any intermediaries at all.

You can have local and international money transfer that safe, final and
trustworthy. Money, of course, meaning bitcoin (or ether, or ...). That's a
valid usecase.

That's the key.

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dvt
I think most commonsensical people are starting to realize how big of a bubble
this is. I mean Facebook is used by one BILLION people DAILY -- and it
literally knows almost everything about its users. To say that XRP is even
remotely as valuable as FB is just so trivially untrue, it seems pointless to
even argue.

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pg_bot
I remember seeing a bumper sticker in silicon valley that said "Please Lord
give me just one more bubble". It looks like their prayers have been answered
with cryptocurrencies.

~~~
tnn225
Is it really a Silicon Valley bubble?

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grizzles
Step Right Up. Everyone can be a winner. Bargains galore. That's right, you
too can be a proud owner. For One-tenth of a dollar, one-tenth of a dollar, we
got service after sales. You need Ripple coins? We got Ripple coins. How about
you sir? Something for the little lady, something for the little lady. Ma'am?
We have the best quality Ripple Coins in the world here. Get your coins folks
before we run out...

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cmurf
Ripple has retained a majority of XRP currency. So at any moment, buyers can
unknowingly transact in something akin to an IPO, without actually owning a
part of the company, or having voting shares. In such a case, you're just
forking over money to the company, not to other XRP owners. Reeks like
potential Ponzi.

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oh_sigh
I'm fairly sure he wouldn't be able to liquidate anywhere near as many coins
as he has without destroying the market

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zerostar07
the prisoner billionaire: as soon as he starts selling one dollar his wealth
goes to zero

~~~
knocte
OTC markets exist.

~~~
zerostar07
there is no such demand for cryptos i think, since its all speculative

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myf01d
If virtual currencies are the future and anyone can create his own currency,
how does this affect inflation in real economies? these are endless trillions
of dollars created out of nowhere!

~~~
username223
AFAICT it's getting harder to convert between the various forms of
play/virtual money and actual money. When the bubble pops, good luck
exchanging alphanumeric strings for actual stuff. There's some seriously shady
stuff keeping it inflated...
[https://twitter.com/Bitfinexed](https://twitter.com/Bitfinexed)

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tomasien
Except he’s not because all his coins are vesting. Are Zucks FB shares
vesting? Don’t think so.

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ikeboy
So is there a good explanation of why banks would use Ripple and why it's
better than their existing options?

~~~
justboxing
Yes. From what I understand researching this company and currency for a couple
of months, ripple's technology eliminates the middle-man banks that are
involved in cross-border payments , thereby eliminating the fees they all
charge, and also reduces the time taken for the funds to reach destination
from 3 - 5 days or more, down to 3 seconds.

They use XRP, the ripple crypto currency to hold the sender and receivers
funds during the transaction.

See also this video that explains it really well =>
[https://www.youtube.com/watch?v=Q2YHhLkOO9g](https://www.youtube.com/watch?v=Q2YHhLkOO9g)

and this one, which is more technical and explains their blockchain technology
/ xCurrent software.
[https://www.youtube.com/watch?v=bU79HunxJp8](https://www.youtube.com/watch?v=bU79HunxJp8)

~~~
flashmob
In the video that you have posted, they do not seem to transfer XRP, but USD.
In fact, XRP is not needed to use their products (Assuming the video was about
'Ripple Connect')

Source:
[https://www.reddit.com/r/Ripple/comments/6jd9w6/this_is_the_...](https://www.reddit.com/r/Ripple/comments/6jd9w6/this_is_the_difference_between_xrp_and_ripple/)

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dboreham
Sell!

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anigbrowl
Tulips for everyone

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blhack
Actually I am wealthier. I just made a new coin called "hacker coin". There
are a trillion coins, and my girlfriend just bought one of them from me for
$10.

It has a 60% premine that I will be using to attract people to the platform
(lol).

So my current net worth is about $6T.

~~~
cryptoz
There are markets with people buying and selling Ripple. This fundamentally
changes the situation and makes your analogy not useful. Clearly you're
joking, but clearly Ripple has more to it than your silly story, and nobody
would ever conclude you are worth $6T. Your math is flawed in that is not
backed by a market at all, but Ripple's is.

I'm not justifying its valuation, but your argument is fallacious.

~~~
nextstep
No, Ripple’s market cap is completely fictitious. The circulating supply is
tiny and if this “billionaire” tried to liquidate a significant portion of
these ripple tokens, it would crash the market. Look at the 24h trading
volumes for xrp.

~~~
etcet
It looks like it's trading around between $1B and $8B a day:
[https://coinmarketcap.com/currencies/ripple/historical-
data/](https://coinmarketcap.com/currencies/ripple/historical-data/)

It doesn't seem that difficult to cash out at least few billion with that kind
of volume.

