00:00If XRP goes to $50,000, $100,000, $10,000, the market cap for the asset is going to look
00:07absolutely absurd to most people, and we're going to break down why and how that can happen
00:12in this video. All right, so many people look at digital assets the same way they would look at
00:20traditional stocks. There's a stock, it's traded at a value, there's an order book, there's liquidity
00:25at certain price points that people are willing to buy and sell that asset for a certain amount
00:29on the secondary market or public market. And they take that, they multiply that price by the
00:34outstanding shares, and voila, you get a market cap for something. But this isn't really applicable
00:39to digital assets once speculation is gone. When there's real utility for these assets,
00:44the value is going to be in the protocol. This is something that Glenn Hutchins has said a couple
00:50different times at key points, and I would encourage you to go check out those videos.
00:54So what does that mean? If you had $1,000 XRP, it would be trillions of dollars in market cap.
01:02It would look absolutely ridiculous. And at $10,000, you have quadrillions as a market cap
01:08for XRP. So how is that possible? Well, the value of the asset is driven by the total transactions
01:16that are happening over the network or the protocol. What I could liken this to for most people that may
01:22have some relevance is imagine you sent a dollar every single time you sent an email. Imagine how
01:28many emails you send on a daily basis. Well, you do that through the email protocol, right? You could
01:36think about how many emails move daily. That market cap of the protocol, if it was moving value,
01:43would be astronomical. And that's how you should look at digital assets as well, because that's what
01:48they're doing. Email moves data packets, and it's the same thing for digital assets, but they're
01:53moving value from one place to another. So that is how the market cap of something like an XRP or an
02:02XLM or an HBAR could be astronomically higher than the valuation of companies that we know today on the
02:07stock market. And if you had asked somebody, you know, 10 years ago, if there was ever going to be a
02:12trillion dollar company, they'd have laughed you out of wherever you were. They would have thought that
02:16was absolutely absurd. But now we have Google, Apple, Amazon, many of the Fortune 500 and FANG stocks that
02:24most people have invested in, NVIDIA, have multiple trillion dollar market caps. And those are going to
02:30be superseded by these assets that move across these networks that are transferring value from one
02:36location to another. So the next time somebody tells you that the market cap of a digital asset
02:43because of a certain price point that you mentioned is going to happen, or you think is possible, I would
02:47challenge that and just explain it the same way that I have here. I would explain to them that these
02:52are protocols and networks, and these assets are moving value. And at scale, it's the volume of those
02:59transactions and the value moving over the network that's going to drive the price of the token.
03:03And it is going to look ridiculous when people calculate it in market cap. I actually think that
03:08there's going to be something else, some other metric that these networks are valued by that looks
03:14at the liquidity of the asset that's moving the value rather than the market cap like you would
03:20value a stock. So I know that this is a question that I get often, and it's been a reoccurring question
03:26the entire time that I've been invested in digital assets. And it almost always comes up when I'm having
03:31a conversation with somebody that's very familiar with markets or TradFi and has made multiple
03:37investments. They do the math, and they're like, that doesn't seem like it would work. But it actually
03:42does if you think about it in this way, rather than traditional stock. If you do like this content,
03:47please like, subscribe, and we'll see you on the next one.
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