David Schwartz, Ripple’s Chief Technology Officer, has sparked discussions by suggesting that seeing XRP at higher prices, like $1 million, is more practical for payments. He shared his views on Quora, responding to questions about the token’s practicality in payment setups.
Ripple, as the largest holder of XRP, leverages the cryptocurrency as a bridge currency for its payment offerings. The token’s speed and robust features make it attractive for banks, especially for cross-border payments. This has led market participants to believe in the token’s potential as a preferred choice for financial institutions.
A question on Quora asked whether banks would keep XRP’s price low if they adopted Ripple’s technology and if the token’s finite supply could hinder mainstream adoption. Schwartz highlighted the benefits of a higher-priced token for large transactions.
He explained that a higher price enhances XRP’s liquidity, making large payments more cost-effective. Drawing a parallel with Bitcoin, Schwartz noted that when Bitcoin was priced at $100, a $1 million transaction would significantly impact the market. However, as Bitcoin’s price rose, the same transaction became more feasible due to the higher price, requiring a smaller fraction of the total supply.
XRP: A Costly Affair
This principle applies to XRP as well. Schwartz emphasized that a higher-priced token allows large transactions to be conducted with minimal market disruption. Higher liquidity reduces payment costs, making the token an efficient vehicle for high-value transactions.
Schwartz’s assertion aligns with Ripple’s broader goals of streamlining cross-border payments. Ripple aims to offer a faster, more cost-effective alternative to traditional banking methods, with the token as a central component.
Before his Quora comment, Schwartz argued on X in November 2017 that XRP cannot be too cheap. He illustrated that a $1 million payment would require 1 million of the token if it costs $1. However, if XRP trades for $1 million, only 1 XRP would be needed. Thus, a higher price makes the payment cheaper.
Nearly seven years later, Schwartz maintains his belief. In response to community speculations four months ago, he stressed that it is senseless to believe Ripple would want to keep the token’s price low. This reply reaffirmed his 2017 comments and underscored Ripple’s vision for the token’s role in the future of payments.
