In a Twitter thread dated 18 August 2022, Chad Steingraber, a known figure in the XRP community, presented an intriguing thought experiment about the future of XRP. His theory explores the idea of XRP becoming a reserve asset, similar to gold, for banks and institutional liquidity providers. On 25 July 2023, Steingraber encouraged his followers to give his theory another look, hinting at its potential relevance for the future.
Steingraber’s theory suggests that banks like Bank of America (BOA) could hold XRP as a reserve and use it to grow their business. They wouldn’t send their XRP anywhere but would instead increase their balance, similar to how banks hold gold reserves.
He introduces the concept of Institutional Grade Liquidity Providers (IGLPs), which could hold a balance of XRP and a variety of other digital assets. Banks would use these IGLPs to transfer money to other banks. For example, BOA could send its “BOAcoin” to an IGLP, which would use XRP to transfer it into “JPMorganCoin,” which would then be sent to Chase bank and show up as dollars in an account.
Steingraber argues that banks and IGLPs will hoard XRP because it will become a business necessity. He suggests that the global transfer of money will depend on XRP. He speculates that once banks and IGLPs have acquired the public supply of XRP, it will be gone forever.
He further suggests that banks could start panic buying XRP, significantly increasing its price. Once banks have acquired XRP, they won’t sell it back into the public market because the profits from doing so would be insignificant compared to the business of global money transfers.
Steingraber suggests that the public supply of XRP on exchanges is less than people realize and that a significant amount of XRP has been lost. He speculates that the public supply could drop dramatically as banks and other entities acquire it.
In conclusion, “The Chad Steingraber Theory” presents a (perhaps overly optimistic) future where XRP is a reserve asset for banks and IGLPs. However, it’s important to note that this scenario is speculative and not a guaranteed or predicted outcome.
