The market value of all cryptocurrencies has crossed $1 trillion and is now the world’s fifth most circulated currency!
If that’s not a shocker, think about this: Just last June, the value of all digital currencies sat only north of $260 billion.
In a year where general economic malaise and stock market turmoil ruled the headlines, Bitcoin’s frenzied surge in the 2nd half turned cryptocurrency into a major talking point in 2020.
However, not all the buzz surrounding cryptocurrency was positive.
In December, the SEC charged Ripple – the currency remittance and settlement network which issues XRP – for selling unregistered securities. They alleged that XRP should have been registered as a security from the start. Subsequently, major crypto exchanges like Coinbase announced a full suspension of XRP trading starting from 19th January.
In barely a month, XRP dropped from its high of $0.60 to $0.28. On the flip side, even after smashing well past its $20,000 all-time high, investors are further expecting a bull run for Bitcoin in 2021.
The value of these two major cryptocurrencies could not be more different. How can this be?
The teacher in me is constantly thinking and questioning.
What gives an asset its value? Is it market perception or is it real intrinsic value?
In good times and bad, gold has long been the standard bearer of value.
There’s obviously real intrinsic value for gold now, especially since it has several industrial uses. Yet, if we date back to say 25 B.C, gold still held tremendous value, despite it only having decorative uses as jewelry.
People associated gold with wealth, prestige and power. Gold’s value was driven largely by perception and it still is to a large extent today.
Call me old school but I grew up in the Midwest, where good old “cash is king” is still alive and well in some of these parts. Though physical assets like gold and cash will always provide some assurance of value, I firmly believe that cryptocurrency is the future.
Imagine if the government’s stimulus payments were digitized through cryptocurrency instead. This would bypass the usual long wait times for checks to clear, allowing many quicker and easier access to their funds.
Although I have yet to take the plunge on Bitcoin, I had diversified into cryptocurrencies like Ethereum, Cardano and XRP previously.
Bitcoin and XRP each have their use cases. Between the two, XRP’s strength, reliability and efficiency as a token for cross-border transactions gives me confidence in its viability.
There are plenty of practical use cases for XRP and the exchanges’ attempts to de-list will only drive its value up further in the short run.
Although XRP is nowhere near the investment value potential of Bitcoin, I’m driven more towards its utility and believe the SEC charges have little merit.
Many countries, including Japan, Brazil, and major European banks have been using XRP as a means of cross-border settlements for years and deemed it not a security.
However, until the courts can sort out the legal wrangling, it is too soon to make any firm conclusions.
Far be it for me to read the tea leaves, but I believe the entire crypto industry, not just Bitcoin, is due for a bull year in 2021.
There will likely be a bubble and what remains after is a referendum on how much real value and/or perceived value each cryptocurrency truly has.
Hear leading authority and crypto-evangelist Anthony Pompliano crow about the digital future on Quite Franklin. If you want further great insights about any and all things cryptocurrency, be sure to give it a listen.