Just days after Coinsquare Discover reported that Ripple (XRP) overtook Ethereum in market value, it has pulled ahead of Bitcoin using the implied market capitalization valuation method.
At that point, Ripple’s market capitalization was $87 billion with a value per coin of just over $2 USD. Today, January 4th 2018, Ripple’s price reached $3.84 USD and a total market capitalization of $148 billion. These figures are based on the number of coins currently in circulation, not the total supply of coins.
Looking at implied market capitalization, the term used to reflect the market valuation should all units of a currency be in circulation, the recent price increase means it is now more valuable than bitcoin. The implied market capitalization of Ripple is now $368 billion. The implied market capitalization of Bitcoin is $314 billion USD. Implied market capitalization is viewed by some experts as a more accurate and forward-looking metric than market capitalization.
Ripple creators set the number of available coins (XRP) at 100 billion, though only half will be released for sale. The other half currently remain under ownership of Ripple.
Satoshi Nakamoto, creator of Bitcoin, fixed the available number of Bitcoin at 21 million.
At the moment 79.98% of all Bitcoins are in circulation, relative newcomer Ripple has 38.74% of coins in circulation.
Why investors choose Ripple
We could be looking at a chicken and egg scenario with Ripple’s gaining momentum. News of its rise in value is exposing the digital currency to more and more investors, leading to yet more investment.
Experts aren’t seeing one particular reason for the coins current and sudden popularity.
As always, though, there are theories. The digital currency market is seeing an influx of new investors, for instance. These investors are not necessarily the early Bitcoin evangelists who drove the digital currency market at its inception. Instead, they are profit-seeking individuals who chase growth and opportunity.
Investors in Ripple are likely to be a mix of those looking for Bitcoin alternatives, opportunistic investors looking for the next Bitcoin, and market savvy professionals seeking to back a digital currency that might be able to handle the transaction volume experienced by global fiat currencies.
Ripple has the potential to meet different types of investors’ needs. It is more scalable, cheaper, and easier to process than Bitcoin. The organization currently promotes its blockchain RippleNet as a global payment mechanism to equal SWIFT and VISA.
The process of mining Bitcoin, verifying, and releasing blocks on its blockchain creates issues of speed and scalability. Ripple isn’t mined like Bitcoin, it’s centrally issued. Though this creates an argument to say Ripple is not a digital currency, the argument does not seem to be holding any sway in the digital currency markets.
There is also interest from South Korea and Japan this week following the Forbes report of the partnership between SBI Ripple Asia and major Asian banks. The partnership could see over 90 Japanese and South Korean banks using RippleNet blockchain technology on a commercial scale in the first quarter of 2018.
Moving on from bitcoin
Ripple initially positioned themselves as a complementary technology to Bitcoin. RippleNet’s original designers made it to process any form of currency including Bitcoin.
However, the Ripple team is likely happy with the news of Ripple’s trading success and place as a major rival to Bitcoin.
With the news of Ripple’s value increase, co-founder Chris Larsen was called the richest man in the world. This, however, was an exaggeration. Much of Ripple’s new-found wealth should be attributed to its parent company, Ripple Labs, and not only Larsen himself.
More accurately, Chris Larsen’s personal wealth is estimated to be at least $37 billion USD.