- David Schwartz, Ripple’s CTO, has outlined 3 potential solutions for addressing the scarcity of XRP as the value of the token rises.
- XRP is being bought by large investors despite the recent decline in trading. This high level of buying indicates that a possible price increase is imminent.
Eduardo Farina is the CEO of Alpha Lions Academy. shared David Schwartz is the Chief Technology officer of Ripple and is tackling this issue via the X Platform. Schwartz spoke about the possible consequences if XRP were to become scarce, to the extent that its smallest unit (a millionth of XRP) became too valuable for transactions.
XRP’s supply is reduced organically by every transaction made on its ledger. As XRP’s value increases, the reduced supply This could pose some challenges for its use as a means of exchange. Schwartz has outlined 3 critical solutions in light of these issues.
- Increasing XRP Divisibility Schwartz said that the first step would be for the community to accept a greater divisibility of XRP. The software would need to be updated in order for smaller XRP token divisions. XRP’s divisibility would also allow it to be used for daily transactions, regardless of the overall supply, by increasing its division.
- Transparency in Transaction Fees Schwartz has also come up with an alternative solution. It revolves about changing the way transaction fees are calculated. Currently, the fees charged for each transaction depend on how many drops are involved. If XRP becomes too scarce, then the XRP Community could change this metric from drops to transactions. This would mean, in essence, that one drop can cover several transactions instead of each transaction costing an amount of drops. This could reduce the effects of scarcity.
- Introduction to Transaction Credits Schwartz argued that the solution to the problem was the creation of an asset called “transaction credits.” All users would start with zero credits and the price of these credits is one trillionth XRP. In the event that a user did not have enough credits to complete a given transaction, the XRP drop equivalent could be converted at a fixed rate into transaction credits, for example one million drops = 1 transaction credit. This system protects XRP value by separating the transaction costs and direct XRP use.
At the time this article was written, XRP (Ripple’s native coin) is currently at $0. swapping hands for $0.595, marking a 0.93% and 1.20% decline in the last 24 hours and past month, respectively. The digital asset’s 24-hour volume has also dropped by 38.64%. Despite recent drops in trading, the whales have been busy. buying XRP. This high level of buying indicates that a possible price increase is imminent.
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