QKL123 Research Report | Ruibo, the leading currency for cross-border payment, can the market stand in the top three?

Abstract: At present, the secondary market activity of Ripco is relatively low compared to Bitcoin, and the price is subject to a high risk of being overestimated by the market. In the coming period, the market demand for Ripple is not as optimistic as Bitcoin and Starcoin, and it has a higher inflation risk than Bitcoin. In the long run, the high probability of Ripple's price will further widen the gap with Bitcoin after continued shocks.

Ripple, stellar and bitcoin price trends (from the beginning of August 2013 to the end of March 2019; unit: US dollars)

Source: CoinMetrics, QKL123

Ripple Co., Ltd. is the certification of Rippo Network. It was released in 2012 by financial technology company Ruibo (formerly known as Ripple Lab, OpenCoin) and is committed to providing cross-border payment services to banks or payers. The original CTO Jed McCaleb left Rippo in 2013 and developed the Star Open Source Agreement since 2014. The stellar open source agreement also provides cross-border payment services for banks or payers, and has a clear competitive relationship with the Ruibo agreement. At the beginning of April 2019, the circulation market value of Ripco was 14.688 billion US dollars, while the circulating market value of the star currency was 2.488 billion US dollars, accounting for 15.92% and 2.70% of the market value of Bitcoin, respectively.

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From August 2013 to March 2019, the open market price of Ripco rose from around $0.006 to around $0.32, during which prices rose nearly 52 times, while the open market price of Bitcoin rose from around $120 to more than $4,000. During the period, the price has turned over 30 times. Among them, the highest price of Ripple has reached the historical peak of 3.36 US dollars (early 2018), and then fell sharply, and the current decline is nearly 90%.

In the past five years, the ROI ROI was as high as 5,421.62%, which was significantly better than Bitcoin in the same period. Especially during the bull market in 2017, the return on investment was 21 times that of Bitcoin in the same period. Comparing the annual return on investment of Ripco and stellar coins in the past year, the average return on investment of Ripcoco in 2017 and nearly one year is significantly higher than that of the same period. However, in 2015 and 2016, the return on investment of Ripcoco Significantly lower than the star currency. It is worth noting that in the past three months, the return on investment of Bitcoin and stellar coins was significantly higher than that of Ripple.

ROI, stellar and bitcoin return on investment Source: Messari, QKL123

In the future, what is the price trend of Ripple? In the following, we will compare the historical indicators of Ripco, stellar and bitcoin in terms of supply, demand and valuation, and mainly give the judgment basis of Ripcoin price trend from the economic and technical level.

1. Two key indicators reflecting the supply of the Ripco market: market supply and inflation.

Ripple, stellar and bitcoin distribution curves (theoretical)

Source: Messari, QKL123

Unlike Bitcoin's issuance mechanism, the maximum supply of Ripple is 100 billion, and the transaction costs incurred in the network are destroyed (actually low consumption). Among them, 20 billion (20%) of the pre-excavated Ripco coins were distributed to Ripple's three founders (Chirs Larsen, Jed McCaleb and Arthur Britto), and the remaining 80 billion (80%) Ripple coins were sold publicly. In May 2017, in order to alleviate the supply pressure of Ripple, Ripple promised to entrust 55 billion pieces of encryption and limit the sale of 1 billion Rippo coins per month. The unsold part will be transferred back to third party for future sales.

At present, the inflation rate of Ripco is maintained at around 3.79%. Although it is slightly higher than the inflation rate of Bitcoin (3.75%), the inflation rate will vary depending on the monthly sales volume of Ripco. The sales model is similar, which will bring some inflation risks. Moreover, for Ripple, if the risk of selling by the founder (high proportion of holdings) is increased, the risk of inflation is further increased. It is estimated that by 2050, the market liquidity of Ripple will reach 100 billion, and its annual inflation rate will be close to 0% (possibly negative), while the annual inflation rates of Bitcoin and Star Coin will be 0.01% and 1% respectively.

Ripco, stellar and bitcoin distribution strategies and corresponding inflation rates Source: Messari, QKL123

Second, two key indicators reflecting the market demand of Ripco: the number of transactions on the chain (Transactions) and the number of active addresses on the chain (Active Addresses). The number of actual transactions and the number of active addresses in the chain can reflect the strength of market demand.

Daily chain transactions of Ripple, Starcoin and Bitcoin (from the beginning of April 2013 to the end of March 2019)

Source: CoinMetrics, QKL123

Similar to the function of Bitcoin, Ripple is mainly used as a payment medium for blockchain network systems, and its network transaction speed is relatively fast and transaction costs are relatively low. During the period from April 2013 to March 2019, the number of transactions on the daily chain of Ripple increased from 2,000 to more than 300,000, and the number of transactions has increased by more than 150 times in six years, which is higher than the number of transactions on the Bitcoin chain. The growth rate (60,200 increased to around 300,000). However, in the past year, with the sharp decline in the price of Ripco, the number of transactions on the daily chain has dropped significantly higher than that of Bitcoin, which has decreased by 40% during the period, while the number of transactions on the daily chain of Bitcoin has increased significantly. . At present, the number of daily chain transactions of Ruibo Network has been significantly lower than the peak of 2014 (721,213), and the fluctuation of the number of transactions on the chain is also significantly higher than that of the Bitcoin network. The future growth trend is worrying.

Daily active addresses on the chain of Ripple, Starcoin and Bitcoin (from the beginning of April 2013 to the end of March 2019)

Source: CoinMetrics, QKL123

In the past six years, the number of active addresses on the daily chain of Ripple has increased from around 200 to around 5,000, and the number of active addresses has increased by about 25 times. Although it is higher than the growth rate of bitcoin, it is significantly lower than the growth of Ripcoco transactions. Amplitude. In the past year, the number of active addresses on the Ripple chain has dropped from 5,539 to 4,550, a decrease of about 20% during the period, while the number of active addresses on the chain of Bitcoin and stellar has increased. In the future, the growth rate of the number of active addresses on the daily chain of Ripple is likely to be slower than that of Bitcoin and Star Coin.

3. Three relative indicators for judging the price of Ripco: the ratio of market capitalization to Transaction Volume (MtV), the ratio of market capitalization to network value (Market capitalization/Network Valuation, MnV), market value. The ratio of market capitalization/Exchange Volume (MeV).

MtV, market value/chain transaction amount, the inverse of analog currency circulation speed (1/V=M / QP), can be understood as the speed or usage rate of Token in the chain. In general, the lower the Token relative usage rate (the greater the MtV deviation from the general level), the greater the likelihood that the market value will be overestimated.

MnV, market value/network value, that is, the ratio of the market value of the Token project to its network value, can be compared to the traditional financial indicator PB. In general, the higher the relative value, the greater the likelihood that the market value will be overestimated. The network value adopts Zipf's Law, and its calculation formula is N*ln(N), where N is the number of active addresses on the chain.

MeV, market value / market transaction amount, that is, the reciprocal of the turnover rate, the turnover rate can be understood as the speed of Token in the secondary market. In general, the higher the circulation rate of Token in the secondary market (the lower the MeV is relative to the general level), the higher the activity in the secondary market and the greater the possibility that the market value is overvalued.

Daily market capitalization/chain trading volume of Ripple, Stellar and Bitcoin (from early April 2014 to the end of March 2019)

Source: CoinMetrics, QKL123

During the period from April 2014 to March 2019, Ripco MtV remained between 200 and 400 for most of the time, much higher than the range of bitcoin MtV (10-30). In the past year, the MTV of Ripco has ranged from 100 to 250 (there has been a sharp fall in the near term), the MtV of the star has remained between 1,000 and 10,000, and the bitcoin MtV has remained between 20 and 30. At present, although Ripco MtV is at an all-time low, it is significantly higher than Bitcoin MtV, and the risk of Ripcoco price being overvalued by the market is very high.

Daily market capitalization/market trading volume of Ripple, Starcoin and Bitcoin (from the beginning of April 2014 to the end of March 2019)

Source: CoinMetrics, QKL123

Ripple MnV rose from around 20,000 in 2015 to the peak in July 2017 (337,776), and then significantly different from Bitcoin MnV, but increased significantly at the end of 2017 and reached its maximum value in June 2018 (956,877) It has fallen sharply. At present, the MnV of Ripco and stellar coins are around 300,000, which is significantly higher than the MnV of Bitcoin. Moreover, the extent to which Ripple MnV deviates from the historical mean is significantly greater than that of Bitcoin, so Ripcoin prices are more likely to be overvalued by the market than bitcoin prices.

Daily market capitalization/network value of Ripple, Starcoin and Bitcoin (from early April 2014 to the end of March 2019)

Source: CoinMetrics, QKL123

In the past five years, the value of Bitcoin MeV has been decreasing year by year, from around 300 in 2014 to around 120 in 2016, and then dropped from around 60 in 2017 to around 30 in 2018. There is still a downward trend. It shows that the trading activity of the entire Token secondary market continues to increase. Between 2014 and 2015, the Ripco MeV showed significant fluctuations, and after a large fluctuation, it showed a trend of decreasing year by year. At present, Ripco MeV is significantly higher than Bitcoin and stellar coins, and the secondary market trading activity is relatively hot but relatively low.

Finally, predict the price trend of the Swiss currency.

At present, compared with Bitcoin, the secondary market activity of Ripco is hotter but lower, and its price is greatly overvalued by the market. In the coming period, the market demand for Ripcoco is not as optimistic as Bitcoin and Starcoin, and it has a higher inflation risk than Bitcoin. In the long run, if the market demand for Rupee currency cannot be significantly increased relative to Bitcoin, the high probability of Ripple's price will further widen the gap after continued shocks.

This paper mainly analyzes the market trend of Token price from the perspective of indicators or technology, and does not act as an investment suggestion.

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