When Wheels Fly

Aug 08, 2020

I fucking hate dot-connectors. These morons are responsible for the avalanche of misinformation that we have to wade through every single day, and it's wearing me the hell out. They are so DESPERATE to find ANYTHING that could be construed as positive for their $200 investment so they can be millionaires overnight, that they will publish/tweet/tube endless collages of loosely connected snippets merely containing keywords with no insight into what the relationship could be, drawing radical conclusions that don't even fit within the realm of reality, smugly claiming near clairvoyant powers of observation, and defiantly rejecting any and all counter-evidence. And there's SOOOOO many of them out there, a veritable stampede of stupid. I'm not saying that if I had a "nuke dot-connector" button that I'd use it, but I'm probably not going to hit the "rescue dot-connector" button either.

It's easy to get caught up in the day-to-day minutiae, particularly if you hold the popular belief that we are just one piece of awesome-sauce news away from a spectacular face-melting cum-all-over-yourself parabolic explosion in XRP's price. But what news could that possibly be? We've already had several money-shot news breaks, and still the price of XRP is a paltry fraction of its ATH.

Where I'm going with this is that most of you are focused on the wrong thing. It will not be 'news' that breaks XRP out of its slumber, it will be utility. Come back from the front lines, and start looking at the bigger picture.

Ok, ok, sure, a speculative parabolic 'may' come around again, but those always crash, particularly if fed by the Ponzi Bitcoin mania. I'm not interested in talking about speculation runs that have nothing to do with Ripple or XRP itself, I'm talking about hard-core doggy-style price appreciation that defies manipulation, defies TA, defies historical precedent. I speak of none other than the effect of..

The FLYWHEEL

Most of you have heard of that term, but probably couldn't describe what it means, or how it works, so let's step back into familiar territory before I get into it.

Stocks

Everyone LOVES to compare crypto to stocks. You have exchanges, trading tools (futures, options, margin, etc.), technical analysis (cough cough..bullshit!), and all kinds of speculation wars with FUD and FOMO campaigns fighting hard to shift investor sentiment.

At this time in the crypto markets, that's pretty much all that's going on as well, this speculative warfare, all trying to figure out what the future price could be once this technology really hits mainstream and start delivering promises.

It's here that I want to delineate crypto from stocks. With conventional stocks, there's nothing behind the price but PURE speculation. By this I mean, a stock's price usually resembles the investors' sentiments towards the performance of the issuing company, but there's nothing other than speculation.

Say for example, you bought into Google stock. They make an announcement that they will be making quantum computers for the general public. Big news right?! Stock goes through the roof! Early investors take their profits, price stagnates and eventually most of those gains are eaten through profit-taking. This is the nature of a stock boom-bust, because the only thing keeping a stock's price up, is the fickle opinions of the investors.

Whales

Let's talk about whales for a bit. These are entities with large holdings, and they have the ability to meaningfully affect a stock's price, the very same way we see things playing out in the crypto space. Most of us have negative connotations when we think of the word "whale", but a whale can also be beneficial if they are using their influence on the price in a direction you're aligned with. For example, Ripple has been using its warchest to counteract the negative influences of the whales with its own 'benevolent' whale market activity.

We're all hoping of course that Ripple can put up a good fight, and keep the price of XRP from being further manipulated down, though this doesn't equate to Ripple being able to dial in a price. They can only really oppose the whales and try to keep the price steady. Ripple raising the price not only borders on market manipulation, but would cost exponentially more, and nobody, not even Ripple has that kind of scratch. In other words, Ripple's warchest alone won't get us there.

Flywheel

Here's where the difference between stocks and crypto comes in. It's the fact that crypto can ALSO be used in utility cases, that the price isn't merely set by speculation, like stocks are. To really highlight this, for example, you're aren't going to buy a car with your Google stock. Stock can't be used for anything. Crypto can. This alone isn't the flywheel, it's just an added bonus that the 'demand' for crypto can not only come from speculation, but from people wanting to use it for its utility as well, a double-demand, and stocks ain't got none of that, which is why nobody really 'gets' the flywheel concept and how it will play out.

What is a flywheel? Quite simply, it's a specific type of utility that 'self-reinforces' the demand it creates. An example would be a product that rewards people for 'hodling' in the form of interest. This leads to hoarding, which increases scarcity, which increases price, which increases demand as more people want to benefit from both the interest and price increase, repeat. Any mechanism that increases demand and stretches supply can be described as a flywheel.

All the money

Ripple saw right from the beginning, the Olympic Gold medal of crypto is to have their coin embedded in the trillions of dollars worth of daily global payment flows. It's such a big big target, that necessarily, it's taking years and years to facilitate the necessary infrastructure.

Many people are understandably frustrated that ODL's adoption has been slow, but they don't understand that there needs to be ODL corridors in place in order for ODL to be an option. You can't take a train from A to B if there's no tracks right? This will take several years to fully build out, but in the meantime, the few corridors that are open are in business and ODL growth continues.

But that's done little for the price, as everyone intimately knows. The payment flows are paltry compared to the overall ledger traffic. It just seems impossible that volume can ramp up enough to start having an effect on the price.

Or is it?

We humans tend to shut down when considering either timespans of more than a week, or when attempting to discuss growth in anything other than a linear fashion. This is a common shortcoming, but know this, the network effect will be exponential, not linear. Ripple's expansion will be small small small small big massive galactic! What's important to pay attention to now is that even small steps are instrumental in getting to the the larger steps, and we can't get to the larger steps before all the smaller steps are taken; so rejoice every time you hear a new ODL corridor is opened, or that we have a gain in ODL quarter over quarter. It doesn't have to be big to be important to getting to big.

So what exactly is Ripple's Flywheel?

If Ripple can get XRP embedded in enough cross-border payment corridors, the network effect will pick up, more customers will join RippleNet, and there will be exponential demand for XRP to keep up with payment flows. In other words, the network effect caused by FIs recognizing the cost-savings of ODL, along with the ancillary use cases ODL creates, will continue to create demand for XRP.

The easiest way to think about the effect of the flywheel, is to just imagine it being yet another benevolent whale. It will start very small, but it feeds on the network effect krill, getting bigger and bigger, unstoppably bigger, irrationally bigger, bigger than the analogy even makes sense for, the Godzilla of fucking whales, a zombie godlike machine that chews through XRP supply 24/7/365 like we're not even here. It will absolutely head-stomp all other whales.

There's nothing like this effect in the stock world, or pretty much anything really; it's a new paradigm altogether, so I think many people are going to be surprised at just how potent this flywheel magical force will be when it starts turning, in how it will defy all contemporary stock investment modeling. There are already some clear examples of flywheels kicking some serious ass in the crypto space, but they're mostly niche boutique markets that have a limited ceiling; a one-trick pony per se. Ripple's one-trick pony however, is ALL THE CROSS-BORDER MONEY FLOWS IN THE WORLD!!

If Ripple pulls it off, it will be.. THE.. Flywheel, by which all flywheels will be measured for the rest of time; the ultimate flip. This is how Ripple drives value into XRP, by putting all the pieces together so the flywheel whale can feast.


Anybody know what Bitcoin's flywheel is? Oh ya, fuck all


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