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Ripple has a big problem – inflation

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Ripple has a big problem - inflation

Ripple has a big problem – inflation
CONTENT

  • XRP sank 95% from its all-time high.

  • The Ripple project regularly issues a huge amount of tokens from its escrow accounts.

  • As a result, XRP inflation exceeds that of other cryptocurrencies, which can negatively affect the price..

International consortium of news organizations developing transparency standards.

Ripple cryptocurrency is characterized by inflation at a level above 20%. This is the highest among the top 10 cryptocurrencies, and it can significantly affect the XRP rate..

Ripple has a big problem - inflation

Last year, Ripple turned out to be one of the top outsiders among the top ten cryptocurrencies in the world. Overall, XRP is now down 95% from its all-time high of early 2018. According to some experts, such pressure on the currency may be associated with the regular and ever-increasing flooding of a large number of new XRP coins to the market..

Inflation isn’t just for fiat currencies

XRP currently has the highest inflation among cryptocurrencies with the largest market cap, according to analyst firm Messari. It is 20.5%. For comparison: in addition to XRP, only one more currency – Tezos – also boasts inflation above 10% (13.1%). All other top coins predominantly range from 2.6% (EOS) to 5.1% (LTC).

As for bitcoin, after the recent halving in the BTC network, the inflation of the world’s main cryptocurrency is now only 3.8%. It is lower than gold and significantly lower than XRP.

Ripple has a big problem - inflation

As with traditional fiat currencies, cryptocurrency inflation is driven by the growth rate of the money supply. The higher this indicator, the more monetary units are in circulation and, accordingly, the lower their value..

The inexhaustible reserves of Ripple

According to the same resource Messari, the volume of XRP coins currently in circulation is 29.86 billion, or 30% of the total XRP supply. However, according to CoinMarketCap estimates, this value is 44%. In any case, this is in stark contrast to Bitcoin, where over 87.5% of the final supply of coins is already in circulation..

Regularly unlocking tokens from a project’s escrow wallet has long been common for Ripple. Millions of new coins are thrown into the market every month. XRPArcade has estimated that Ripple has released 5 billion XRP tokens from its accounts this year alone. This causes active discontent among members of the crypto community. To some, such massive liquidity injections even resemble the PlusToken scam. Others fear a fall in the exchange rate every time.

Be that as it may, 49.4 billion XRP are still blocked on the project’s escrow account, and their emissions (1 billion monthly) are planned until mid-2023. This means that this problem will persist for the foreseeable future..

Meanwhile, one must not forget that it is the deflationary nature and limited reserves of bitcoin that have always been positioned by crypto enthusiasts as its fundamental advantage over fiat. In theory, this should support the bitcoin rate in the face of aggressive quantitative easing policies that are currently being implemented by central banks around the world..

Do you think that regular XRP issues are causing the currency to depreciate? Why is the project implementing such a policy? Share your opinion in the comments and join the discussion in our Telegram channel!

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Ripple has a big problem - inflation

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