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Cryptocurrency News Articles
Ripple CTO David Schwartz Says XRP Can’t Be ‘Dirt Cheap,’ Explains Why
Sep 22, 2024 at 12:36 pm
In a recent discussion on social media Ripple's CTO, David Schwartz, that he holds XRP, stating that if there were a way for him to increase its price
Ripple’s CTO, David Schwartz, recently shared his thoughts on XRP’s price and its impact on institutional payments. During a discussion on social media, Schwartz mentioned that he personally holds XRP, and if there was a way for him to increase its price, he would certainly do it.
In response to a user's comment on XRP being "dirt cheap," Schwartz highlighted an interesting aspect of the matter. He noted that the term "dirt cheap" doesn't fully apply to XRP's price. Schwartz explained that if XRP were to cost $1, for instance, an entity would still need a large quantity (around a million XRP) to make a $1 million payment, which would ultimately cost them $1 million.
"It can't be dirt cheap. That doesn't make any sense. If XRP costs $1, they'd need a million XRP, which would cost $1 million. If XRP cost a million dollars, they'd need one XRP, which would, again, cost $1 million," Schwartz noted.
When asked to clarify his statement further, Schwartz responded diplomatically, stating that the last time he checked, $1 million worth of XRP still cost $1 million. He elaborated that if an entity needs to make a $1 million payment using XRP, it would still require at least that amount in XRP.
Schwartz also highlighted an important point regarding institutional payments and XRP's price. He noted that lower XRP prices actually make payments more expensive, which might seem counterintuitive.
To illustrate this concept, Schwartz compared XRP to Bitcoin and its role in large transactions. He noted that when Bitcoin was valued at $300, it wasn't practical to purchase a house with it due to the massive quantity of coins required. However, as Bitcoin's value increased, it became more feasible to use it for such transactions.
"If XRP costs $0.01, an institutional payment of $100 million would be one billion XRP. They'd need to buy and sell one billion XRP to make the payment, and if the spread is 2 cents (which it easily could be at that volume), they'd lose $20 million on the trade. If XRP costs $100, they'd need one million XRP and would pay $200,000 in spread," Schwartz explained.
He further added that higher XRP prices would lead to smaller quantities of coins being used for large payments, ultimately reducing the impact of the spread and making payments more efficient from an institutional perspective.
"That won't make your payments any cheaper. It'll just mean that buying and selling the same value of XRP moves the market against you more, making payments even more expensive," Schwartz concluded.
Schwartz's insights offer a unique perspective on the relationship between XRP's price, institutional payments, and the challenges faced in integrating cryptocurrencies into traditional payment systems.
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