Why Is Ripple Cryptocurrency So Cheap

Why is ripple cryptocurrency so cheap

Hot on the heels of industry leaders Bitcoin and Ethereum, Ripple (XRP) is firmly positioned as the world’s third-most valuable cryptocurrency in terms of market capitalization.

Why is ripple cryptocurrency so cheap

In fact, for a very brief period in early 2018, Ripple overtook Ethereum to move into second place.

However, the value of a single XRP token has always been significantly lower than the value of a single Bitcoin or Ether.

While Bitcoin and Ethereum have reached all-time highs of $20,000 and $1,417 respectively, Ripple has yet to break past the $3.84 mark. As a result, we are often asked “Why is Ripple so cheap?”

Much of the answer, as you will soon learn, has to do with Ripple’s large token supply.

How the Circulating and Total Supply Affects the Price of Ripple (XRP)

There is often a misconception that the total value of a particular cryptocurrency is in direct correlation to its price per token.

Why is ripple cryptocurrency so cheap

Although this is partly true, insofar that a cryptocurrency’s total value is based on the price of the token going up or down; in reality, its overall value can only be assessed in terms of market capitalization.

Market capitalization refers to the amount of coins or tokens in circulation (also called the circulating supply), multiplied by the current market value.

For example, if a cryptocurrency is valued at $1 and there are 5 million coins in circulation, then the project has a total market capitalization of $5 million.

Why is ripple cryptocurrency so cheap

At the same time, if a cryptocurrency was valued at $10 and it had a circulating supply of 500,000 coins, then the market capitalization would still be $5 million.

Suggested Reading Learn more about market capitalization in our comprehensive guide to the topic.

As you will see from the above example, a higher token price does not necessarily mean that the project is worth more when taking into account the circulating supply.

So how does this relate to Ripple being so cheap?

Well, the price of one XRP token is currently (October, 2018) valued at $0.447, and the circulating supply is approximately 40 billion tokens.

Ripple - What You NEED To Know Before Buying Ripple

This gives the project a total market capitalization of $17.88 billion.

Compare this to fourth-ranked cryptocurrency Bitcoin Cash, which has a token value of $436 but a circulating supply of only 17 million—vastly lower than the supply of XRP.

Although each Bitcoin Cash coin is worth exponentially more than each XRP token, 40 billion XRP is still worth significantly more than 17 million Bitcoin Cash.

All in all, although the price of Ripple is significantly cheaper than other cryptocurrencies such as Bitcoin, Ethereum and even Bitcoin Cash, it is still the third-most valuable project in terms of market capitalization because of its huge circulating supply.

Why is Ripple so Cheap?

We hope by reading our ‘Why is Ripple so cheap?’ guide in its entirety, you now have a firm understanding of why the price of XRP is considerably lower that of its counterparts among the top cryptocurrencies.

Why is ripple cryptocurrency so cheap

Although the likes of Bitcoin and Ethereum have a market value that is substantially higher than XRP’s, their overall circulating supply is significantly smaller. As a result, even though it has lost close to 90% of its value since achieving all-time highs of $3.84, XRP is still the third-most valuable cryptocurrency in terms of market capitalization, but not in terms of value per token.

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