Inflation is something that most people do not associate with Bitcoin or most other crypto assets. In the case of Ripp;e’s XRP, however, it appears that the supply suffers from inflation, which may be why its price is decreasing.
The XRP price has taken a significant drop in recent months.
The Inflation of XRP is Worrisome
There are many reasons for this development, including a massive drop affecting the overall market.
Another contributing factor is the ongoing inflation of the XRP supply.
This is primarily due to Ripple releasing amounts from its escrow accounts.
While unsold tokens are put back in escrow every month, these temporary changes in supply should not be ignored.
Messari statistics confirm that Ripple’s asset has the highest inflation rate of them all.
It currently sits above 20% per annum, which is well ahead of Tezos – at 13.1% – and Litecoin’s 5.1%.
Bitcoin, on the other hand, is deflationary, which seems to be the only sustainable model.
Whether any of this is influencing the price of XRP directly, remains to be determined.
Inflation is often the bane of any asset, and should be avoided altogether.
Similar to fiat currencies, however, Ripple’s native asset isn’t but to avoid inflation, even if it is just a temporary change.