David Schwartz, the Ripple CTO, previously noted that seeing XRP at higher prices, such as $1 million, is more practical for payments.
Schwartz revealed this on Quora while addressing a question about the practicality of XRP’s price in payment setups. Being the largest holder of XRP, Ripple has continued to leverage the cryptocurrency as a bridge currency for its payment offerings.
Due to its speed and robust features in facilitating these payments, especially across borders, market participants expect XRP to be an attractive choice for banks. Amid these expectations, a proponent took to Quora to ask a question on how this sort of adoption could impact XRP’s price.
XRP at $1M is More Practical for Large Payments
The inquiry revolved around whether banks would prefer to keep the price of XRP low if they were to adopt Ripple’s technology and whether XRP’s finite nature could hinder mainstream adoption. In his response, Schwartz highlighted the benefits of a higher-priced XRP, particularly in facilitating large transactions.
The Ripple CTO explained that a higher price for XRP enhances its liquidity. This, in turn, makes it more cost-effective for large payments. He drew a comparison with Bitcoin’s evolution. He noted that when Bitcoin was priced at $100, purchasing enough to make a $1 million transaction would significantly impact the market price.
This level of volatility would make such transactions impractical. However, as Bitcoin’s price rose to over $10,000, making a $1 million transaction became more feasible because a smaller fraction of the total Bitcoin supply was needed. Schwartz discussed this in December 2017. At the time, BTC traded between $13,600 and $16,600.
Notably, the same principle applies to XRP. Schwartz emphasized that a higher-priced XRP means that large transactions can be conducted with minimal market disruption. This higher liquidity reduces the cost of payments, making XRP a more efficient vehicle for high-value transactions.
Essentially, as the price of XRP increases, the amount necessary for large transactions decreases. Consequently, this phenomenon stabilizes market impact and facilitates smoother transactions.
“XRP Cannot be Cheap.”
Schwartz’s assertion syncs with the broader goals of Ripple’s payment offerings. The San Francisco-based firm looks to streamline cross-border payments by offering a faster, more cost-effective alternative to traditional banking methods. The use of XRP as a bridge currency in these transactions is central to the vision.
Before his comment on Quora, David Schwartz had argued on X in November 2017 that XRP cannot be too cheap. He stressed that a $1 million payment using XRP would require 1 million XRP if XRP costs $1. However, this same $1 million payment would require 1 XRP if XRP trades for $1 million. According to him, a higher price would make the payment cheaper.
Except that higher prices make payments cheaper. Right now, you can buy a million dollar house with bitcoins. When bitcoins where $300, it would move the market too much and be too expensive to be practical. So higher prices make payments cheaper. 2/2
— David "JoelKatz" Schwartz (@JoelKatz) November 20, 2017
Nearly seven years later and the Ripple CTO has held onto his earlier beliefs. In response to community speculations four months ago, Schwartz stressed that it is senseless to believe that Ripple would want to keep XRP’s price low. This came as a reply to questions around his 2017 comments.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
