Ripple update: Highway analogy for price of XRP increase from xRapid
So imagine that we are in a pre-automobile and pre-highway era. There are two major cities 80 miles apart. With a horse and buggy it would take 3-5 days to traverse. A new technology comes in (automobiles/XRP) that would drastically decrease the time needed to travel to 1 hour, however there needs to be a highway in place for the car to travel as cars cannot travel through rough terrain. Horse and buggies are still the prominent way to travel between the two cities. Automobiles are considered a fringe technology.
Now imagine the first highway (xRapid) was built between the two major cities. When it first opens, there is no traffic. Only 30 people travel between the cities per day. The first adopters of automobiles will have the road to themselves and reap the benefits. **Over time**, others will notice how much faster it is to use cars and the highway to travel. More and more buy cars and use the highway. Now it is up to 300 people traveling between the cities per day — still, barely any traffic. Over time, the ones that use cars will be able to be much more productive and profit from the decreased travel time. This is when shit gets real.
Profit-seeking individuals will start opening businesses based on the new technology and make huge gains, drawing more profit-seeking individuals to join. Eventually, the highway becomes congested. It still takes 1 hour for travel, but now there are 58,900 people traveling per day between the cities.
Now imagine the price of XRP was the toll booth. With each person, the toll booth collects 1 cent. Only when there is a high volume of consistent travelers will revenue increase. Volume will increase and decrease between days and months, but **to have a consistently high volume, profit-seeking individuals need to see the benefits of (i.e. how they can** ***profit*** **from) the new technology.**
TL;DR xRapid and SBI going live is a necessary but insufficient step for XRP volume to increase. How long will it take to create businesses and start producing big profits from using XRP? That’s how long it will take.
–> I realize the analogy is not 100% correct but it’s mainly to say that we should celebrate when Ripple opens corridors/builds highways, but should expect time between when it is built and when volume increases. We should all be excited to see what new businesses emerge in the future because of these technologies. That is what will ultimately drive up volume.
About Ripple (XRP)
Ripple connects banks, payment providers and digital asset exchanges via RippleNet to provide one frictionless experience to send money globally. Banks and payment providers can use the digital asset XRP to further reduce their costs and access new markets. XRP is the fastest and most scalable digital asset today.
Author: patdutsalidut
Score: 51
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