You know, I had actually thought about investing in Ripple at one time. (actually, about mid-December when it was around $0.75) Mainly, because it wasn't the standard cryptocurrency. It started shooting up and I was thinking, wow. I should have pulled the trigger (I don't beat myself up over stuff like that) You hit some, you miss some, you win some, and you always will lose some, but I pride myself on never being the speculative sucker at the table.
Anyhow, as it was shooting up I held off on buying it because I started to think. Okay, we know what Ripple is. How do you define it's actual value? To do that, you must understand what it does and what that's true value is.
Ripple is a facility to send anything of monetary value (cash, silver, gold, water) globally providing the two gateways
*trust* each other and support the trading of the monetary item in question on either side. (ie, money in -> gold out is supported)
Ripples (what you're actually buying here) is actually used as a last resort. It is used only when the two gateways at hand do not actually have a trust relationship. So, gateway A) accepts Bob's $50 and converts them to ripples and transfers those ripples to gateway B) and gateway B) converts those ripples back to $50 cash to give to Jim.
So, I ask. What is individual ripples value derived from? If I have $50 and I want to send it to John in German. How many ripples does that take? (currently 43.47) Why does it take 43.47 ripples to be valued at $50. I mean, again. What is the value of a ripple derived from? Some Joe Schmoe purchasing a ripple at a specific price without the intent on actually transacting with someone overseas? Just to hold ownership of a ripple? We expect millions of people to buy ripple just to hold it? That serves no purpose, except for those wanting to use ripples to transfer monetary value from one place to another. That doesn't benefit the holder of ripple since the people using ripple to facilitate trading aren't providing value to the person that holds ripple isn't even in play of that transaction.
Say 1,000,000 buy 1,000 ripples and that drives the price to $1 each.
Bob and Jim trade $50 again. Gateway A) sends 50 ripples to gateway B) and Jim gets his money. The two gateways get a piece of the transaction fee, (ripple is like a Western Union of sort) but the other people who hold ripple get diddly swat. So, it's not even as if ripples where shares of the Ripple company and you get a piece of their earnings on those transactions. It isn't shares, and you're not getting any of those profits.
Instead of a million people buying a thousand shares, only 500,000 bought 500 shares and now Ripple is a $0.50 per. Now Bob and Jim trade $50 again. This time Gateway A) sends 100 ripples instead of 50 ripples to gateway B) and Jim then gets his money.
Either way it happen no matter what the price of ripples are providing they aren't zero. Ripples can be worth $0.0001 and that $50 transaction can still happen. So I ask. What is the value of a ripple to an investor? The only people who should care about the value of a ripple are those that buy and hold it. Those that use ripple for it's facility, it's 100% irrelevant. So, there are only two classes that would own ripple to hold it.
- Gateways, because they must own ripple to facilitate the transaction.
- People who have no valid reason to actually own it as it serve them no purpose.
This is why I didn't end up purchasing ripples at $0.75 just prior to it's rise to almost $4 and them immediate fall back to $0.75. Now that's it's rising again. I smirk and think. Are gateways pulling the strings here? I mean, they are the ones to make the money if outsiders (people other than gateways) are buying ripples. Because if they buy ripples 5 million at $0.75 to support their business. Then a 10 million other people buy thousand ripples and boost the price to $4. You just turned their $3.75M into $20M which would make you their cash cow puppet.
Sure, you can speculate (again, GAMBLE), but most speculators / gamblers can win early on, but a massive majority end up losers over the long haul.
