Ripple XRP, the third largest cryptocurrency by market cap, has moved at an unexpected pace in recent weeks. The consensus-based digital asset beat Ethereum (ETH) to be the second largest coin in the crypto space, before declining to 30 percent and dropping back to third most valuable cryptocurrency. But what if its surge regains steam? It’s not hard to imagine a scenario where it hits $7 USD — and does the previously unthinkable by topping bitcoin’s market cap.
Market capitalization is the value of the entire digital currency according to tokens available on the market. Like a publicly-traded company’s market cap, it’s calculated by multiplying total supply by the price per unit.
However, there seems to be a bit of confusion whether XRP is the second or third most valuable digital asset. Recently, CoinMarketCap excluded South Korean exchanges from its price calculations, due to major price difference with the rest of the world. That move led to XRP’s 30 percent drop. However, other price indexes still list Ripple as the second most valuable crypto asset by market capitalization.
According to CNBC’s report, Ripple XRP price would only have to escalate to $6.57 USD to outdo bitcoin’s market cap. At this stage, however, it does not look like achieving it any time soon. At press time, bitcoin’s market cap is at $253,552,703,950 — whereas Ethereum and Ripple’s market capitalization stands $116,466,725,735 and $91,516,193,612 respectively.
Ethereum, a bitcoin and XRP rival, is not very far to achieve the top spot. Ethereum and Ripple have been jolting for the second spot for quite a while, but it won’t be far when both digital assets jostle for the first spot.
(note: “Ripple” generally refers to the company and “XRP” is the official name of the token. However in news reports and conversation, “Ripple” is often used to refer to the token itself.)
To be the cryptocurrency with most fiat value, Ripple needs to gain by 164 percent — whereas Ethereum only needs a hike of 134 percent. Although Ethereum seems to have a better chance to make it to the top, some predict XRP to be the clear winner, as several financial institutions are reportedly trialing Ripple’s blockchain-like consensus system. Some of the top banks that support its digital system are Bank of America, UBS, and Santander.
Erik Voorhees, CEO of ShapeShift, accused the crypto asset of using banks’ names to hike its value, saying:
“The reason Ripple is surging so much is it’s a bubble. Testing crypto with banks doesn’t make sense. The whole idea of crypto is you don’t need banks.”
XRP is a “premined” coin with a total supply of 100 billion units (maximum), out of which only 40 percent is made available to crypto investors. Ripple the company keeps most of the rest in reserve, and founders including Chris Larsen and Jed McCaleb also received significant shares. XRP is also “deflationary” as tokens are destroyed with use, reducing the total number available.
XRP’s original function was as a “bridge currency” without counterparty risk, for exchanging other assets on the Ripple network. It was never intended to be a store of value itself, though Ripple’s founders didn’t exactly rule out the possibility it would become valuable.
Ripple started well in 2018 by reaching an all-time high price of $3.80. The virtual currecy has surged over 30,000% in past 12 months, whereas BTC saw a hike of about 1,500 percent.
Currently, bitcoin — which has always been the largest cryptocurrency by market cap, is losing its dominance in the crypto space. At press time, bitcoin’s market share sits at 34 percent, as per CoinMarketCap data.
Bitcoin’s transaction fees and network congestion are considered key factors that pushing crypto enthusiasts away. Conversely, Ripple boasts a four-second settlement time and much lower transaction fees. The issue is pushing crypto investors to look at bitcoin alternatives such as XRP and ETH.
Financial commentator Tom Luongo said: “Ripple is the stalking horse of the cryptocurrency industry. Its meteoric rise in price coincides with bitcoin’s peak and subsequent meandering.”
Ripple has a clear purpose: to be a key player in the current financial ecosystem. Thus, its digital asset has been labeled by critics as the “BanksterCoin”. As with other assets, the South Korean and Japanese crypto markets will play a major role in making Ripple the biggest cryptocurrency — that is, if they’re still counted.
Which will be the most valuable cryptocurrency in the future — Bitcoin, Ripple or Ethereum?
Images via Ripple, Pixabay