Hello! As someone who works at Ripple…
First of all, just want to clear up some misconceptions that Ripple is the private company using blockchain technology (XRP Ledger) to make cross-border payments cheaper, faster, and more secure, and XRP is the digital asset that runs natively on the XRP Ledger.
Now that’s cleared up, to answer your question…
It’s true that blockchain technology is something innovative and asymmetric in risk/reward profile, but I believe we should step back and look at the macro-view instead of thinking as short-term as 2020.
Let’s take a quick look at the 3 booms 🙂
1. Dot-Com Boom
2. Crypto Boom
3. Venture Capital & Private Equity Boom (Using Facebook as a proxy)
The connective tissue here is the unknown element (as asymmetric hedge fund investor Chris MacIntosh puts it).
Here’s more of his take on the subject…
“When the dot-com boom was just gearing up for its wild party, there were some outrageous stories that began to get told. This was while the champagne was still being sipped and partygoers were just getting tipsy.
It took a few of those stories being believed (no matter how outrageous) before the partygoers now joined by many more said, ‘Well, look over here, where company X just raised at Y valuation, then surely this can be justified elsewhere.’
And so in the end, everyone drank so much they couldn’t remember their names.
The crypto boom was not unlike the dot-com boom.
A new technology where nobody had seen it before, and so how big could it be? Nobody knew. And since this one is still fresh, the fact is we still don’t know, though I believe it’ll not be dissimilar to the internet, but that’s going to take time.
Moving onto venture capital and Silicon Valley tech in particular, you’re really dealing with massive unknowns. New technologies, new untested management teams and founders, and an entire industry now built to facilitate it all.
In every business we can argue over whether or not 30% margins are realistic… or if they should be 25%. And we can argue over whether a company can grow at current annualised CAGR of 10% or is it likely to be closer to 8%.
Analysts will argue until they’re blue in the face over such things but at the end of the day these variables change the end result… but not by all that much. And importantly, they’re pretty boring for most people.
What really changes the end result and valuation is the unknown.
New technologies lend themselves particularly well to this. How the hell could an analyst in the late 80’s or early 90’s have figured out what e-commerce would look like in the future? He couldn’t.
How big could the market be? He didn’t know. How fantastic could it all be and what about that “early mover” startup with the CEO who wears a hoodie? Suck your thumb and try sound intelligent. That unknown element lends itself particularly well to bullshitting.”
So back to XRP…
Even as a Ripple employee, I can tell you… I don’t know. Scout’s honor.
Instead of predicting what will happen in 2020, look at the fundamentals, and add or take exposure from the table accordingly.
Everything in the crypto space is still speculation, and people who are looking so short-term (2020) are simply gambling for a quick buck.
You may make a lot of money one time through this, but over decades worth of time, you will never make consistent gains with this kind of process.
In regards to where Ripple’s headed…
Where Ripple is headed is towards a direction much larger than just increasing the price of XRP.
We are in the process of enabling what we call the Internet of Value, which is for value to be exchanged as quickly as information does today. As we onboard more financial institutions onto our network, we will—hopefully—bring more volume to the XRP ecosystem, which if you know standard economics, any market with more volume should drive the price of that particular asset up.
At the end of the day, the cryptocurrencies with actual use cases should be the ones that will win out through the test of time. Although, it will take time (10–20 years time).
Speaking solely of crypto…
This is what I would do: Buy 5 crypto assets you’re bullish on (after you’ve done some due diligence, of course), position size wisely, then invest with equal capital allocation and just watch them run over the next 20 years.
Cryptocurrency is here to stay, but which ones nobody really knows 🙂
There are honestly other investments with better risk/reward fundamentals at this time (uranium, anyone?), since the crypto market is still so nascent.
Chris allocates his capital well before the market does. He did it in…
- New Zealand real estate for a 64x return over 5 years, cashing out in mid 2006 just before Lehman Brothers reminded the world how dangerous the leverage had become.
- the venture capital space where he built and then sold a VC firm which deployed around $30m of capital (too early to accurately predict his returns) selling out in 2015 when valuations had gone crazy).
- He did it with Bitcoin (bought in 2014, haven’t sold).
- And he’s currently doing it with his investment research service Insider Weekly, where he shares what he’s personally buying and selling in real time for subscribers.
Chris retired in his late twenties and has over 20 years of experience in analysis of geopolitical macro trends, so who better to learn from than someone who’s turned pennies into pounds many times over before (with good process + a focus on deep-value investing + a hint of luck)?
To Your Abundance,
PS – Enjoy your investing journey!