Cost of the system at high XRP price – a NO brainer


hello everyone
let’s get started today I wanna take a look at the cost of the whole system because there are many arguments that there will never ever be so much money to pay out retail
investors at high price I will be concentrating on two documents from Ripple the XRP cost model paper I will put the link into the description of
this video and also the ripple vision from where I took the yearly cost of the
whole system 1.6 trillion more or less on the actual cost paper there are three models basically explained here you see economic
implications of a universal bridge asset six points which basically
produce cost for Nostros, or for the current system foreign exchange, currency hedging, treasury operations liquidity, payment operations, and Basel 3
compliance here you can see a chart from the cost model paper if the bank is just
using xCurrent so they will save roughly 30% on current cost in this picture and this I will concentrate on they will save, by using XRP at high volatility 40% however I wanna stress that that Shane Ellis theory which is
what I’m still believing in very strong stated that those mechanics with the
buy and sell walls will keep the volatility quite low so if we scroll down further and check on low-volatility Ripple predicts even a 60% cost reduction let’s take a look at the numbers first I want to
explain the figures I have taken from ledger.exposed today
about two hours ago the green marked area is all but the top 3 levels marked here bigger than a 1000 XRP marked here bigger than 10’000 XRP on the bottom I have added the total values how many accounts are in total how many XRP is available in total all but the top three level accounts in total
the XRP in all but the top three level accounts and the XRP in all
accounts which have more than a thousand XRP or more than 10,000 XRP but because the difference here is quite I mean it’s about 10 percent but I think
we can neglect those 10 percent so I’m concentrating basically on all XRP
but the top three levels the top three levels more or less is exchanges and ripple itself you can actually see that where it’s blue on ledger.exposed you can click and then it usually lists the name so it’s basically exchanges which hold those values up
there and I mean basically the exchanges will not really, I mean maybe they will,
sell to those conducting payments as well but most likely it’s not them okay now I explained ledger.exposed now let’s look a little bit at at the cost calculation I have done and I really
want you to check those figures I will put an Excel file in the in the
description of this video so you can check check the figures and play around
with those figures yourself just to get a feeling of the immense numbers where
we’re dealing here so I will go quickly through the top rows and explain and I will explain why I will that explain that the yearly global Swift
volume I am assuming is about a bit more than one quadrillion like five trillion a day for 250 days a year gives us about that number so here is millions
billions trillions quadrillions okay then the cost on the on the transaction
ripple basically describes in this table here the global average cost is about 20
basis points now 100 basis points is 1% which gives us
as for the 20 basic basis points it gives us I think I made a mistake hundred basis points or no it’s correct so that would be 1% no actually it’s wrong to be like that so the figure is actually even higher which basically invalidates my conservative estimate in Frankenmath because in the Frankenmath video I stated that I’m assuming a worldwide cost of about 200 billion per year now ripple themselves doesn’t take this 2.5 trillion which would relate to this 20
basis points they actually take these figures from this document thes 1.6 trillion annually which is these cost now when we look at the two levels of
savings a company can make its either 40 percent if XRP has a high volatility if we apply that on this 1.6 trillion we get this 640 billion now in the theory of Shane Ellis XRP will have a low volatility so basically the saving would be around 60% even which is almost a trillion million billion trillion right I will also again,
because you know me I’m usually taking the conservative figure so I’m basing my my calculations or my comparison below which I want to go through with you on
the on the very conservative level now I have played through several scenarios
okay let’s assume XRP would get to $1,000 we have about 300,000 holders of XRP with more than a thousand XRP if they would cash out if each of them would cash out a million that would be like half of that value of the cost savings so they could even cash
out 2 millions each of those 300,000 holders with more than a 1000 XRP and it’ll still be a no-brainer if all of those 300,000 would want to cash out 10 million then it would take about five years
is that correct right right because we need to get a return on investment on
that figure so this figure is about 5 times lower than that so it would take about five years to get a return on investment that’s when we look at the amount of XRP now the different perspective could be that we that we check how much in total people would wanna cash out so if all of those with more
than a 1000 XRP at a $1,000 per XRP would cash out it would be 13 trillion I always have to see million billion trillion that’s way too much that’s about like 20 times higher that would take about 20 years so that wouldn’t work at 50% we would still be 10 times higher than the yearly cost saving so it would be like 10 years to
get a return on investment but I mean who will cash out 50% I mean that’s really up to you that I just give you the figures you do your own
interpretations on that now if all those holders with more than 1000 XRP would only cash out 10% then we would be in about 2 years
in the in the level of a return on investment now in the scenario from Galgitron he is doing it also very rough very conservative on estimation at
100 dollars XRP holders that’s wrong here
that should be 10’000 XRP there is like 86’000 XRP holders with more than 10’000 XRP which would give them at least a million at a 100$ so if they cash out
a million we’re like on 8 billion let’s go back to the figure the cost
savings are 640 billion per year so it’s totally a no-brainer even if these people would cash out 10 million it’ll still be a little bit more than the cost savings they would make at high
volatility but it will still be in range I remember, see Shane Ellis theory says the
XRP price would have low volatility so in that range it would totally make sense they could even all those 86,000 could cash out 10 million and it would still be okay if we look the same again at the total amount of XRP less the top 3 levels which are exchanges and Ripple themselves then we can see 50% or more of all those XRP at $100 could be cashed out and we would still be in
less than a year on return on investment at a 100% it’ll take 2
years but I will tell you 2 years is even for a small to medium-sized company
kind of a no-brainer usually they do investment calculations on a 2 to 3 year basis here we’re not talking about I mean surely surely they
will have recurring cost for the licenses for the Ripple software but that’ll be I don’t know like 10% so basically after the 2 years they’re basically
just making profit okay now I have put some other scenarios below actually
scenario 3, 4 and 5 let’s look at these here I did a kind of calculation
what it would mean if the price would rise in steps so in my first scenario I have steps at 10, 50, 100, 500 and 1000$ and in each step 20% of your remaining XRP you cash out which gives us in each step an appropriate cost okay so at $500 we are still like in the total here we’re still in the in the green range
for getting a return on investment below 1 or roughly in 1 year and even at $1,000 if it’s like these 3 steps and each time 20% of the
remaining XRP is cash out we’re still when we look at the total here it’s like – it’s like 3 years return on investment that’s not too bad however I think 20% is rather a conservative figure now let’s take a
look at the same dollar values 10 50 100 500 and 1000$ but this time with 30% cash out this obviously makes the system more expensive sure but there will be way less remaining XRP in the end in this scenario there’s about 2 billion
XRP less and in the previous scenario was about 4 billion XRP left with that with those XRP holders now the last scenario we look at is a bit more aggressive I again have the same figures 10 50 100 500 and 1000$ but this time 50% of the of the holdings are cashed out the current holdings
so from the 13 million there will be a remainder 13 billion there will be a remainder of 6
billion after the first step to 10$ which would give us these costs if we then would have an additional step to $50 the remainder would drop to 3
billion and the cost would be somewhere around here at 100 dollars that’s actually an interesting figure because it’s almost
the same I have to check if no looks correct that’s coincidence maybe it’s really interesting that these figures are identical in this example and here when we look it’s like 1.2 trillion that would that if we go back
to the to the cost that would give a return on investment in about 2 years and it would make it possible for each XRP holder on every level we reach at 10 50 100 500 1000$ cash out 50% of their XRP with this I want to finish I want that you contemplate those figures that you think about it that you criticize me about errors I’m doing check in the description of the video I will put an Excel file and a the PDF and links to those 2 documents from Ripple remember that small to medium-sized
companies have usual target for return on investment between 2 and 3
years whereas bigger companies usually have return on investment period
between 3 and 7 years so like the top 50 banks or maybe even the
top 100 banks in the whole world for them even if it even if they would bear
the cost to pay us out if it’s done in 2 years if they after 2 years would actually have a return on investment it is still a no-brainer usually they do calculations between 3 and 7 years thanks I’m looking forward for your feedback take care

22 thoughts on “Cost of the system at high XRP price – a NO brainer”

  1. Thank you Michael ? It looks good for those companies and us XRP HODL'ers as well so they must start immidiately using XRP? ?

  2. I believe when xrp gets to those prices we don't need to cash our. We will be able to spend it like Fiat. There will be mechanisms for that to happend

  3. Very well thought out Michael, thank you.
    I think even if banks bear the cost over 10, 12 years its still a no brainer to them. For after that they have the monopoly and will be trading for basically free between themselves.

  4. So if a holder had say 25,000 xrp, a figure Vincent used so often, you're saying it would take years for that holder to cash out?

  5. Deine Arbeit ist fundiert, professionell und voller ZDF….aber dennoch mag ich mir nicht vorstellen, dass wir 2019 mehr als 10$ sehen…aber Du weisst was ich mache, wenn Deine Prognose eintrifft. Ich schmeiss die Druckmaschine an und druck mir ein T-Shirt mit einem Profilfoto von Dir drauf und huldige Dich wie ein König???

  6. Hi Michael, habe ich richtig verstanden, dass Banken auch bei hohen xrp Preisen und hohen Auscashquoten der Privaten, schnell in die Gewinnzone kommen?
    Danke und Grüße ????

  7. Hallo Michael gibts das auf Deutsch auch? Eine Frage an alle wie hoch war die Dominanz 2017 von BTC gegenüber XRP zum vergleich zu heute?

  8. Thank you Michael !! Because I'm not in finance so I don't know all the details, I have a question : those 5 Trillion US$ per day, are they ALL cross valuta border payments for which XRP is needed ? I think – but I could be wrong – that all payments in the euro-zone are SWIFT payments as well, please tell me if I'm wrong ! 🙂
    Remark : who will buy those XRP from the sellers ? If that are banks and they will sell those XRP later in time at a higher price, they will make a profit, which makes the picture less negative may be even positive for the banks, don't you think ?

  9. Hi Michael,
    I'd like to propose another scenario, lets call it scenario 6.

    I think as the price goes up, the cashout rate will be inversely parabolic. Let me clarify what i mean. As you know, there has been a very long bear market and now a long period of stagnation for Xrp.

    At the first 10usd mark, we will see the most returns percentage wise (.30 -> 10) so we can expect a huge cashout rate, like 75% for example.

    However, when we go from 10 to 50 we see a much less percentage wise return and hence the cashout rate would be much smaller, say 25%.

    The same goes for 50 to 100, then say only 12,5% cashout.

    Now when we move to 100 and above, we must take into account that Xrp would be a well regulated, stable and highly used digital asset and holders from prices under $1 would not have any incentives to cashout, so when we reach say $500, the cashout activity would be a lot lesser, say 4%.

    So i think you get my point. The market is structured in such a way that the majority will cashout at much, much lower levels and the cost of payout to retail will be much lower than your figures, imo.

    That is, of course considering Ripple and xrapid are succesful long term.

  10. Thanks! One thing I didn't hear you touch upon was the fact that most of the exchanges have a withdrawal limit per month.

  11. Its not only cheaper to payoff the XRP community but are creating an enormous injection into the economy on "mainstreet" instead of wallstreet. Also producing massive tax revenues and jobs. That also has to be figured in. Thanks for your great analysis Michael.

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