XRP's Global Payment System Potential Could Send Price Soaring

XRP has the potential to replace the global payment system entirely, which would move over $150 trillion across borders every year. The token's value comes from two sources: working capital and people choosing to own it. According to Ripple CEO Brad Garlinghouse, digital assets including XRP make up 'close to zero percent' of the $16 trillion in payments and clearing processed by the company each year.

The assumption that if XRP handles a share of the world's money, it must be worth a share of it is incorrect. XRP works as a conduit, not a container, and its value depends on how fast each token gets reused. If XRP handled every dollar of the $9.6 trillion traded in currency markets each day, the amount that would need to be held in it depends entirely on how fast each coin gets reused.

At ten reuses a day, the system needs about $960 billion held in XRP at any moment, which comes to about $15 for each of the roughly 62 billion coins in circulation. At five reuses, the figure climbs to $1.9 trillion, or about $31 a coin. And at one reuse a day, it takes the full $9.6 trillion, putting a coin at about $155.