Ripple’s Chief Technology Officer (CTO), David Schwartz, has reignited discussions about XRP‘s price potential, suggesting that a higher value, even reaching $1 million per token, could be more practical for facilitating large payments.
Schwartz’s comments emerged on Quora, a question-and-answer platform, where he addressed queries regarding XRP’s suitability for payment systems. As Ripple holds a significant amount of XRP, the company actively promotes its use as a bridge currency within its payment solutions. XRP’s speed and reliability in cross-border transactions have positioned it as a potential game-changer for banks.
Why a Higher XRP Price Could Benefit Large Transactions
A community member inquired whether banks, upon adopting Ripple’s technology, would prioritize keeping XRP’s price low. The question also touched upon the potential limitations of XRP’s finite supply for mainstream adoption. In his response, Schwartz highlighted the advantages of a more valuable XRP, specifically when dealing with large transactions.
Increased Liquidity for Smoother Transactions
According to Schwartz, a higher XRP price enhances its liquidity. This translates to a more cost-effective approach to large payments. He used Bitcoin’s historical price movements as an example. Back when Bitcoin traded at $100, purchasing enough BTC to execute a $1 million transaction would significantly impact the market price, causing significant volatility. This volatility would render such transactions impractical.
However, as Bitcoin’s price climbed above $10,000, facilitating a $1 million transaction became considerably easier, requiring a smaller portion of the total Bitcoin supply. Schwartz made this observation in December 2017, when Bitcoin’s price ranged between $13,600 and $16,600.
The same principle applies to XRP. Schwartz emphasized that a higher-priced XRP allows for large transactions with minimal disruption to the market. This improved liquidity translates to lower transaction costs, making XRP a more efficient tool for high-value transfers. In essence, as XRP’s price increases, the number of tokens needed for large transactions decreases. This, in turn, minimizes market impact and facilitates smoother transactions.
“XRP Cannot Be Cheap”
Schwartz’s perspective aligns with Ripple’s overall vision for its payment solutions. The company aims to revolutionize cross-border payments by offering a faster and more cost-effective alternative to traditional banking methods. XRP’s role as a bridge currency within these transactions is central to this objective.
Even before his recent Quora comments, David Schwartz had expressed similar views. In November 2017, he argued on another platform that XRP cannot be too cheap. He explained that a $1 million payment would necessitate 1 million XRP if each XRP cost $1. Conversely, the same payment would only require 1 XRP if its price reached $1 million. From his standpoint, a higher price would translate to a cheaper transaction.
Schwartz’s continued belief in a potentially higher XRP price, even after several years, has sparked renewed discussions within the cryptocurrency community. While the possibility of XRP reaching $1 million remains speculative, Schwartz’s reasoning highlights the potential benefits of a higher-valued XRP for facilitating large and efficient cross-border transactions, which aligns with Ripple’s core objectives.
