C-C #71: The Narratives Driving XRP, BCH, and BSV

January 10, 2020
Mattison Asher

XRP core narratives

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The core narrative behind the growth in XRP has been the rapidly expanding list of banks partnering with Ripple. More than 200 banks currently use RippleNet. While most use xCurrent, which doesn’t require XRP, Ripple has been successfully signing up more banks recently to use xRapid, which does require the banks to utilize XRP. In fact, Euro Exim Bank in London endorsed XRP and xRapid as the solution to their liquidity problems. Furthermore, more than two dozen firms currently use Ripple’s xRapid solution.

The key bearish narrative against XRP is that the coin is primarily dumped on retail investors to generate revenues for Ripple so they can raise more rounds from venture capital firms. Since Q4 2016, Ripple has sold $1.2 billion worth of XRP. They get to record these sales as revenue on their income statement. Consequently, they have been able to raise $200 million recently in a Series C round. Their business model heavily involves selling XRP, which has little utility for retail users beyond speculation, to generate revenues in order to raise more venture money. As one can most likely see, the logic of the business model is somewhat circular in nature.

BCH core narratives

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On to Bitcoin pretender number 1, Bitcoin Cash. The central bullish narrative behind BCH is that it is a superior peer to peer electronic cash, especially when compared to BTC. The average transaction fee for using Bitcoin Cash is about .65% of the average transaction fee for utilizing Bitcoin. Bitcoin Cash has cheaper transaction fees because the block sizes on the network are larger. Bitcoin has a block size of 1 MB, while Bitcoin Cash has a block size of 8 MB.

On the other hand, the bearish narrative against BCH is that no one will ever use it as a medium of exchange. There are less than 1000 retailers worldwide that accept BCH for payment. Furthermore, there are many stable coin alternatives that in my opinion are much better mediums of exchange since they track an underlying fiat currency such as the USD. Why would anyone opt to pay for goods with BCH if they could use a stable coin like USDC?

BSV core narratives

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For BSV, the narrative that is driving price appreciation has nothing to do with fundamentals. In fact, BSV reacts heavily (such as in the past 24 hours when it rose almost 50%) to developments in the legal trials of Craig Wright. Craig Wright, the face of BSV, claims to be Satoshi Nakamato. Furthermore, he claims to have access to a gargantuan amount of BTC that he could theoretically use to buy BSV. Every time there is an update in the trial that allows Craig to further convince people that the he is Satoshi Nakamato, the price of BSV seems to increase. Looking at the price and volume action, I would also like to point out that there is a possibility that the coin is being pumped.

In contrast to the bullish narrative, the bear story around BSV centers around Craig Wright being a fraud and there being no fundamental use case for BSV. While theoretically BSV could be used as a medium of exchange, there is a paltry number of retailers that currently accept the coin.

Takeaways:

1. Ripple’s (XRP) central tailwind narrative is that it is signing up major banks for xRapid, while its headwind narrative is that their business model relies on dumping XRP onto retail traders

2. Bitcoin Cash’s (BCH) core tailwind narrative is that it is a superior peer to peer electronic cash, while the headwind narrative is that there are better digital asset medium of exchange alternatives such as stable coins

3. Bitcoin Satoshi’s Vision’s (BSV) main tailwind narrative is that Craig Wright is Satoshi Nakamoto, while the headwind narrative is that Craig Wright is a fraud

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