XRP, the native cryptocurrency of the Ripple payment network, has long been touted as a solution for cross-border payments and transactions. However, there are questions around whether XRP’s price will actually benefit from mass adoption of Ripple’s technology.
A recent Reddit discussion highlighted some key reasons why increased transaction volumes may not drive up XRP’s price. The core argument is that the amount of XRP needed to facilitate transactions is very small compared to the overall circulating supply of over 50 billion coins.
For example, even if $1 trillion worth of transactions occurred daily using XRP, this would only require around 37 million XRP. That would equate to an increase of just 0.07% to XRP’s market capitalization. Simply put, the sheer amount of existing XRP means transaction volumes barely put a dent in the available supply.
This dynamic contrasts with tokens like Ethereum, where increased usage of its blockchain for decentralized apps and services creates more demand for the limited ETH supply. With XRP, the flood of coins limits the impact of greater adoption.
The other side of the equation is XRP holders. If the majority of XRP is being “hodled” rather than transacted, then the buy and hold mentality becomes the real driver of price. Scarcity, not transaction volumes, increases value.
This analysis suggests Ripple’s On-Demand Liquidity product may do little to boost XRP price. What matters more is speculative investor activity. Without that, XRP could remain stagnant even if Ripple saw widespread global adoption.
The takeaway is that for XRP, mass usage does not necessarily equate to a higher valuation. The dynamics of supply and demand are more complex than basic transaction volume. Though intricately linked to Ripple’s technology, XRP’s price may follow its own distinct path.
