True-XRP-Market-Cap-Stands-at-37-Billion-with-Inclusion-of-Escrow-Tokens

True XRP Market Cap Stands At $37 Billion With Inclusion Of Escrow Tokens

The XRP digital currency was among the best performers in 2018 after regaining second position in market cap towards the end of the year.

However, there has been a couple debates on the actual market cap of the XRP token owing to a number of its digital coins being held in escrow. This has resulted to a group of XRP & crypto stakeholders disagreeing with the value indicated in coin markets.

Most of the crypto market participants visit CoinMarketCap for crypto analysis updates. The platform enjoys an over 60 million viewership within a period of 30 days placing it ahead of peer competitors. XRP’s market cap and other stats like tokeneconomics are among the information that is featured by CoinMarketCap.

Despite the high reliability of CoinMarketCap, a group of analysts within the crypto arena have criticized their approach for XRP’s market cap calculation. This is because there is a discrepancy in their figures as it is not clear whether to include the Escrow tokens while calculating.

XRP Restricted Coins (Escrow)

The amount Ripple allocated to its Escrow in 2017 sums up to 55 billion XRP tokens. According to the team, this move was meant to regulate the tokens in circulation while creating a certain environment for investors. In his own words, Brad Garlinghouse, said that;

“We’ll use Escrow to establish 55 contracts of 1 billion XRP each that will expire on the first day of every month from months 0 to 54. As each contract expires, the XRP will become available for Ripple’s use.”

Towards the end of 2018, Ripple had implemented a good part of its Escrow gradual release. Information from the company’s website showed that they held 6,697,617,894 XRP tokens while the total number in distribution stood at 40,794,121,066. Furthermore, Escrow tokens had reduced from 55 billion to 52,500,000,013 XRP coins.

XRP Market Cap Calculation

The argument is on inclusion or exclusion of Escrow tokens in the calculation. As would be expected, Ripple has included the Escrow held tokens in their calculations hence a higher value indicated in the company’s website compared to CoinMarketCap’s figure. The approach taken by Ripple values the digital asset using 99 billion tokens while the latter calculates based on the number of tokens in circulation.

In order to reach an agreement, we have to define market capitalization. The information provided by Investopedia shows that one should incorporate all outstanding shares to arrive at a company’s market cap. Therefore, we would have to include restricted shares which means that Escrow held XRP tokens are supposed to be part of the digital currency’s value.

Based on the above argument, the XRP market cap would be $37 billion just as indicated in the company’s website. You might want to question why not apply the same method on BTC? This would hold water if we BTC coins had been pre-developed but the network is designed to facilitate mining. Basically, we cannot guarantee the full supply of 21 million Bitcoins as of press date.

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