Brian Kelly, the CEO of cryptocurrency trading firm BKCM, believes that investors are missing the bigger picture when it comes to Ripple. Speaking with CNBC, Kelly outlined the potential utility for both the Ripple Ledger and XRP.
Ripple’s Utility in the Payments Arena
The global payments industry is incredibly massive. Advances in cross-border payments and international banking systems have increased the total addressable market — with BKCM’s Brian Kelly claiming that the size of the internal payments market, alone, is $155 trillion. According to Kelly, it costs about $31 billion to move the entire $155 trillion strong market.
Ripple’s core mandate is to be a real-time gross settlement system, currency exchange, and remittance network. Ripple CEO Brad Garlinghouse and the team at Ripple believe that XRP can find significant utility in the payments industry — potentially saving banks up to 60 percent on international money transfers. However, to enjoy such incredible cost savings, banks have to use both the Ripple ledger and XRP token framework.
Cost Savings on Nostro Accounts Reconciliation
Nostro accounts are an integral part of the international banking framework.
Simply put, a Nostro account is a foreign currency denominated account held by a bank in another country. Part of the expenses incurred by international banking activities is the inventory cost of maintaining these foreign accounts. According to Kelly, banks can eliminate this cost by using the Ripple ledger and XRP tokens instead of holding foreign currency in overseas accounts.
Ripple, for their part, has been making giant strides in the payments ecosystem. No other cryptocurrency has as many strategic banking partnerships as Ripple. Both RippleNet and xRapid platforms have attracted no shortage of banking partners and financial institutions. However, the value of XRP tokens does not yet reflect the rapid expansion of Ripple activities.
Ripple Price Analysis: “The Bigger the Base, the Higher in Space”
When looking at the above XRP price chart, the popular stock market adage “the bigger the base, the higher in space” comes to mind.
XRP prices have declined since the start of 2018, in line with the rest of the cryptocurrency market in general. However, XRP prices show an extended base period which — if Louise Yamada, Alan Shaw, and Smith Barney are correct — indicates a massive XRP rally might be imminent.
For this happen, Kelly believes that Ripple needs more utility — not only for its ledger framework but for its tokens as well. Commenting on the issue, Kelly said:
The knock on Ripple if you are a currency investor is that you can use the ledger without the currency [XRP tokens] and that’s why [XRP] has to have a utility.