Ripple update: Question about the mechanics of xRapid.
Hey guys, I have been thinking about the buying and selling mechanisms of xRapid recently.
So, currently we know that xRapid purchases XRP with the sender’s currency on an exchange and sells the same XRP for the receiver’s currency on another exchange. I have read people’s opinions stating that when the XRP sells for the receiver’s currency, the price of XRP will decrease in the receiver’s country (which is basic supply & demand).
However, assuming we ignore all fees and withdrawal costs for this example, let’s say that Bank A (USA) is trying to send $1,000,000 USD to Bank B (AUS). Let’s also assume that the price of XRP = $1.00 USD. Now, on an American exchange, 1,000,000 XRP will be purchased and sent to an Australian exchange. Now, it is logical to assume that selling 1,000,000 XRP will flood the market and thus the price would decrease. However, for xRapid to work, all of the XRP will have to sell for $1.00 per coin (as in, if you sell some coins for $0.99, some for $0.98, some for $0.97, etc., the receiver will be receiving less than the original $1,000,000).
How will it all work? If the liquidity from us retailer investors just isn’t there, what will happen? Would the transaction simply stay open and wait for, perhaps another Australian Bank, who are looking at purchasing the XRP to send elsewhere? Could there perhaps be a global agreed upon price? (in that case, I nominate a price of $10,000 per XRP 😉 ) If you have any answers, I would love to hear them! 🙂
*I know that banks can opt to receive XRP instead of their local currency in order to send cheaper later, but I want to only look at currency exchange*
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.
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