XRP - $XRP, Asset Review
General Information-What is XRP
XRP Background
XRP Funding/Collaboration
Token Information-Tokenomics
Consensus
Additional Information-
Upcoming Amendments, XLS-20 / Federated Sidechains / Smart Contracts
Technical Analysis
Conclusion
General Information-
What is XRP
The XRP-Ledger is an open-source, decentralized, scalable, fast, energy-efficient, and cheap blockchain for applications across the financial services space. $XRP was the first deflationary asset with the first decentralized exchange directly built into the blockchain. $XRP is most known for reducing friction in the payment space by slashing costs and being fast for remittances. $XRP is also known for acting as a bridge asset for financial institutions per figure a. While the use-cases are not limited to payments, most developers are building on the XRP-Ledger for other use cases as well. The XRP-Ledger has been active for 8+ years and has closed over 63 million ledgers with no hacks or exploits to the blockchain.
Figure A
2. XRP Background
The XRP-Ledger was created in 2011 by three engineers by the names of David Schwartz, Jed McCaleb, and Arthur Britto. They were fascinated by the Bitcoin blockchain in the early days but saw some limitations that could be improved for a peer-2-peer network. The biggest issue they predicted was that Bitcoin won’t be scalable if it keeps growing, and the network will use too much energy. They couldn’t have been more right, today we are seeing the narrative of being more carbon neutral and how PoW is being banned in certain countries due to energy consumption. The developers of the XRP-Ledger were ahead of their time as they predicted upcoming problems for Bitcoin and created an alternative to combat this.
3. XRP Funding/Collaboration
The XRPL founders gifted 80 billion $XRP tokens to the company Ripple Labs. There was never an ICO or any type of money that was raised for the $XRP token. Ripple Labs Inc, a company based out of San Francisco is an entity that has funded XRPL initiatives. Most recently, Ripple Labs has funded 1 Billion XRP to Grants Program, Accelerator to Advance XRP Ledger Development. These grantees may be found by clicking here. Additionally, other businesses and projects have launched on the XRPL like Coil, Forte Gaming, Exodus Hot Wallet, and Xrplorer security. There are currently 262 applications on the XRPL according to xrparcade.com. This list doesn’t include the 93 projects that were just rewarded grants nor the upcoming grantees. It's clear that developers are interested in building via the XRPL, meanwhile, there are so much more amendments that are yet to come. More on that below.
Figure B
Token Information-
1. Tokenomics
$XRP is the native token used on the XRP-Ledger. All $XRP was pre-mined in 2012 when the ledger was created and forked to a Federated Byzantine Agreement Consensus. This means that currently, all $XRP tokens are in circulation, however some data-providers display incorrect information. According to CoinGecko and CoinMarketCap, the circulating supply is ~48.34 billion XRP with a total capped supply of 100 billion XRP. I believe this to be incorrect because, all tokens have been moved and exist therefore are in circulation. As of May 2022, Ripple has kept a transparent report on how they use their 80 billion XRP. They have an escrow of 45.7 billion tokens that sends 1 billion XRP tokens to Ripple Lab’s address each month. Most of the time, Ripple ends up returning 80% of the XRP every quarter, which can be verified on their quarterly reports.
Figure C
2. Consensus Mechanism
The XRPL uses a unique consensus mechanism known as Federated Byzantine Agreement(FBA). FBA is used for high throughput, scalability, and low transaction fees. XRPL was the first blockchain to implement this consensus to have decentralization, speed, and low transaction fees. FBA also requires nodes to be known and verified ahead of time before users request performance from the consensus. The consensus mechanism has unique properties which just shows how sophisticated the core XRPL developers were in mid-2012.
Figure D
Additional Information-
Upcoming Amendments, XLS-20 / Federated Sidechains / Smart Contracts
The XRP-Ledger has many upcoming developments that are attracting developers. As I stated earlier, there are a lot of applications built on the XRPL as well as pending projects that are being granted. There is a lot of interest in building on the XRP-Ledger, yet so much more to come per the image below. Currently, there is an amendment pending by the name of “XLS-20” which allows NFTs to be utilized and issued on the XRP-Ledger. Once this is passed the XRPL validators will vote on sidechains and smart contracts on the network as well. These amendments will drive mass adoption of the XRP-Ledger as it gives developers more options to build with. It will be fun to watch what gets built as the amendments pass.
Figure E
2. Technical Analysis
Figure F
$XRP has had an amazing run from $.002 to $3.34 yielding ~1,156x + returns. Ever since $XRP hit all-time-highs, we have seen the price fall towards a high time frame demand zone (grey box) which should act as a support region. Price is likely to consolidate in the grey box before making a new move. The way the correction subdivides will give hints on how the next move plays out. Bottom structures typically take a long time to form and reverse when the bears are exhausted, so it's best to stay patient for a clear pattern. Currently, there are two scenarios that I believe will play out. (1) XRP goes to .50 cents and then retrace to .25. (2) XRP goes above .50 cents and holds the .50 region as support leading to new highs. No matter what scenario plays out, one thing stands out ultimately. $XRP has been going sideways for almost 1700 days which means when it goes up again it will be a sharp rise. All in all, the price action of this chart is extremely bullish over the long term, and holding the support will be crucial.
Conclusion
It is my opinion that the XRP-Ledger is the best blockchain at the time of writing. When you look at the top 20 coins on coinmarketcap.com, you see blockchains that have had issues across the board. Bitcoin is currently losing its steam because it is not eco-friendly. Ethereum has expensive gas fees, scalability, and exploits every other week. Solana has got shut down a few times and the list goes on. I don’t want to downplay any other blockchains, but these are the facts and I hold each one of those coins I mentioned. XRP-Ledger has had no hacks, there were never expensive transaction fees, and it can scale while being eco-friendly. There is a reason why institutions, banks, and governments are building on the XRP-Ledger. The XRPL was designed around payments, but not limited to it. The Asian country Bhutan and the country Palau have both launched their CBDCs on the XRP-Ledger. The XRPL has attracted high-profile countries, financial institutions, and governments. Soon the Digital Pound Foundation may* release a digital euro on the XRPL. I can go on and on with the developments about how the XRPL will be continuously adopted, but I won’t. This article is strictly for documentation purposes and I am EXTREMELY bullish on what XRPL will do to the world in the coming decade. THIS IS NOT FINANCIAL ADVICE.