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by skydv 3086 days ago
but they can't sell any of it without annihilating the market. It's like I sell a diamond to my friend for 1 billion dollars, but she pays me 1$ every year for a billion years. So formally I am a billionaire, but actually I am one diamond short.
4 comments
andymcsherry 3086 days ago
$1/year for a billion years isn't worth a billion dollars. It's essentially a perpetuity, which is worth $1 / the prevailing interest rate. If that rate is 5%, you're only worth $20
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mcmacintosh 3086 days ago
That's like saying Bezos or Gates aren't really worth ~60B dollars, like the news are repeatedly saying though. Isn't that right? Considering most of their wealth is in stocks.
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MagnumOpus 3086 days ago
It is technically right. However, even in a 100% firesale, they could make - say - $10bn to $20bn, because the fundamentals of their companies' earnings and dividends would entice sufficiently many new investors to step into the market.

Cryptocoins have no such fundamental value backstop - someone desperately trying to sell a large fraction of the market cap would drive the price to basically zero in short order.

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bmking 3086 days ago
It depends. Surely they could not instantly dump all of their "ripple assets" and expect the market to absorb it. But currently the 24-hours trading volume is 6.6 billion USD (https://www.livecoinwatch.com/price/Ripple-XRP). A huge part of that may be wash trading due to some zero-fee exchangers. Nevertheless I am speachless how relatively speaking a lot of money is actually being poured into this right now.
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shepardrtc 3085 days ago
> Surely they could not instantly dump all of their "ripple assets"

They can't. They've escrowed that 60 billion away and will release it to institutions at regular intervals. Any XRP that isn't bought will be put back in escrow. The executives that have large amounts of XRP themselves are contractually obligated to not dump it. They can only sell a certain amount per week. I think its like 10,000 or something (but I could be wrong on that).

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Anderkent 3086 days ago
The market depth is a more interesting metric than volume. As you say wash trades, or just short-term speculative trades, inflate volume without actually impacting the size of the market.
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raverbashing 3086 days ago
Tech, meet Econ 101
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