Tips on Investing in Ripple
If you’ve been following the cryptocurrency market over the past couple of years, the names Ripple and XRP probably sound familiar.
In 2018, the token briefly replaced Ethereum as the second largest cryptocurrency which came as a surprise to many. However, with the recent volatility of the market, XRP has stabilized as the third position.
So, what made XRP so popular?
How did the token pop up on the top of the cryptocurrency list, and how did it manage to gain a huge fan base?
In this article, we will analyze the factors that helped the token become popular and give recommendations as to whether it is worth investing in Ripple.
What is Ripple?
The word “Ripple” is often mistakenly used when referring to the XRP token.
Ripple represents Ripple Labs, the company responsible for developing and promoting the RTXP (Ripple Transaction Protocol).
Unlike Bitcoin cryptocurrency, which is more commonly seen as a store of value, Ripple aims to become the go-to international transactions provider.
To do this, the platform uses its own currency but also allows others to create their own (crypto) currencies.
So, what is XRP then?
XRP is the token of the Ripple Network. It is used as a meditation tool to exchange digital assets and currencies quickly and easily.
Say, you want to send dollars to your friend who wants to receive euros. The network converts your tokens into XRP and then converts it into EUR. With the Ripple network, the payment takes only 3-4 seconds.
In order to make transactions via Ripple, companies, and banks do not need to posses XRP. The conversion is made automatically, the company keeps enough tokens in reserve. The XRP coins also can be traded on multiple cryptocurrencies independently of the Ripple network.
Based on the above we should differentiate the two terms — Ripple and XRP. The former stands for the system and the cryptocurrency platform that provides quick and cheap worldwide transactions, and the latter is the fuel, the currency that makes it possible. And if you see somewhere people saying that they “buy and sell Ripple,” just know that they mean XRP…
Is Ripple/XRP Good for Investing?
There is no clear answer to this question. There are people who have very skeptical views on this issue. David Schwartz claims that the Ripple network is decentralized, while Vitalik Buterin claims that there is too much control from the side of the company.
However, this provides more benefits than disadvantages:
- Since Ripple is a centralized entity, it can easily be trusted from financial institutions;
- Yes, the company can cancel your transaction, as they did with the Jed McCaleb, but this also strengthens the network’s security and fraud protection;
- The company keeps a significant number of coins in an escrow. They are not available for trading. Together with the inability to mine new coins, this minimizes the risk of inflation.
In my personal opinion, XRP is worth investing it and here is why:
Revolutionary Transaction Protocol
Ripple has invented its transaction protocol in order to make transactions between banks simpler and faster. Ripple payment protocol allows sending tokens that support fiat money and cryptocurrencies, other assets, and even information. It excludes all intermediaries and employs the digital channel.
This channel is open to both parties of the deal, thus, as long as there is a mutual agreement — the transaction is valid.
This is the key principle of the Ripple network. Instead of a blockchain protocol with miners, the newer ledger requires the consensus of its users to confirm transactions.
So, why is the transaction protocol a reason for investing?
- Ripple handles 1500 transactions per second, and with certain improvements can speed up to 50,000 TPS. As it was said before, one transaction takes less than 4 seconds.
- It is useful for banks and companies.
- It is safe.
- It is the best way to transfer any currencies and valuables between banks, companies, and regular users.
All the reasons presented above increase XRP’s investment potential.
XRP Is Affordable
Even when it reached its highest value, XRP cost less than 4 USD.
After the significant downturn in the market during 2018, the price had dropped lower than 40 cents per coin.
This currently makes XRP the cheapest cryptocurrency among the top 5.
Right now, Bitcoin is back in its growth phase. All other tokens may follow this tendency, including XRP.
After all, the token has once shown a twenty-fold soar in a month, so why wouldn’t it do so again?
If this happens, the potential profits can be immense.
And while the same can be said for any other cryptocurrency, it has been observed that coins with a very low value have the potential to grow many more times than, for example, Bitcoin.
Finally, it is important to keep the investor’s psychology in mind as well. Newcomers often want to buy a whole coin, not only a part of it. This is why XRP will increase in demand once the market shows signs of a new bull run.
Ripple Labs was formerly known as OpenCoin. Founded in 2012 by cryptocurrency activists Chris Larsen and Jed McCaleb, Ripple has a great team of talented crypto and fintech experts.
Their previous work includes companies in the likes of Yahoo, AOL, MasterCard, SWIFT, CNN, the National Security Agency, and more.
At this moment, they are developing new products for Ripple, such as xCurrent and xRapid. Their cooperation results in new well-known customers.
Banks Are Friendly to XRP
Bitcoin enthusiasts often claim that the blockchain will make banks useless.
Ripple, however, wants to create a viable solution where financial institutions and cryptocurrencies can work together.
And, judging from their progress in the last few years, they are on the right path.
When companies and regular users send money via SWIFT, one transaction costs dollars, while the same transfer via Ripple costs cents.
Large companies make thousands of transactions yearly, this is why they want them cheap. With Ripple, they save hundreds of thousands of dollars.
Banks that have partnered with Ripple can provide such advantageous services to their clients. This is why over 200 major financial institutions had joined the Ripple network by January 2019:
- PNC Bank, the 9th biggest bank in the USA.
- Banco Bilbao Vizcaya Argentaria, or simply BBVA, one of the largest banking groups in the world, headquartered in Spain.
- Bank of America.
- Cambridge Global Payments.
- Euro Exim Bank.
- JP Morgan.
- American Express.
- Skandinaviska Enskilda Banken, or SEB, the leading financial group from Sweden.
- The Financial Transactions Control Systems, also from Scandinavia.
- Mitsubishi UFJ Financial Group from Japan, and lots of others.
Banks like the idea of using Ripple due to its regulatory-compliant architecture. They are more likely to work with low-risk platforms that are centralized.
Low fees are good for banks and their clients. Users will have the opportunity to ditch banks transfers with high commissions and go with low-fee Ripple transactions.
As a result, financial institutions can make their service cheaper, and thus attract more customers. The more partners that join the network — the higher is the demand for XRP, which results in XRP becoming a good investment.
In addition, the speed of money remittance within Ripple is significantly higher than in Bitcoin or SWIFT. It complements the low transaction costs, and also makes it more advantageous both for banking institutions, regular users and XRP holders. These two factors are one of Ripple’s fundamental benefits.
To be more exact, the average transaction does not take more than four seconds and the system’s capacity exceeds 50,000 transactions per second.
And the commission for this service is significantly lower than any other payment method.
Ripple Labs Inc. is constantly expanding. It inevitably grows together with its popularity and XRP’s acceptance. They open new affiliates in Europe and Asia and involve more and more companies from different countries. When entering the country, the Ripple team tries to contract the leading financial entities there, like CIMB Group in Japan or BBVA in Europe.
The company attracts two-three new partners every week, says Brad Garlinghouse, Ripple’s CEO. Near 100 financial institutions have partnered with Ripple in 2018. Today, the growth rates promise only to increase.
Ripple Isn’t Overestimated
Although Ripple has been on the market since 2012, which is a rather long life for cryptos, it has never known such hype as Bitcoin or Ethereum. Only recently has it gained popularity and gotten to the front pages of various websites and magazines.
Ripple’s potential is notably underrated. Most users and customers see it only as a money transfers provider and forget that:
- It can be used to transmit information as well.
- It can substitute banks where people have no access to regular banking services.
- Ripple is the ideal system for business-to-business communication.
- It can find its use in gambling, media, identity, real estate, etc.
As you can see, the technology that forms the basis of the Ripple network has more uses.
Large Market Cap
The market capitalization greatly influences the stability of cryptocurrency charts. This is the first thing any investor should look at before making any decisions. When the market cap is low, it is easy to drop the price of tokens, or artificially inflate it. An extremely low total value of the cryptocurrency may be the sign of its impending death.
Ripple shows the opposite trend lately. It has the third highest capitalization among cryptos and has held this position for a long while. This is a huge reason to obtain XRP, as it proves its high demand, and promises high profits after the network grows.
Future of Money Remittances
The growth of the XRP network increases the potential of having more financial companies sign up to it.
Usually, these companies already have partnerships with global money remittances. They choose Ripple as a more beneficial, faster, and cheaper way to perform their services.
What could be the result of this cooperation? When more and more banks and money transfer providers connect to Ripple, it could eventually become the largest payment provider in the world.
Think, if Western Union and MoneyGram have decided to join, it means this system is a real future.
Moreover, it can compete with applications such as PayPal and other online payment systems. This makes XRP a solid cryptocurrency to invest in.
Great ROI Ratio
The return on investment ratio is very important for those who invest in cryptocurrency. Speaking of XRP, there is a lot of upside potential to experience a higher ROI ratio than that of Bitcoin.
Let’s see how we estimate the potential ROI ratings:
- Take the all-time high (ATH) of the cryptocurrency, and compare it with the current price. Now calculate how much your funds will appreciate of XRP sees its all-time high again. Your coins’ value will increase 10-fold, while with Bitcoin it is only around 400%.
If you want to become rich with BTC, in 2019, you’ll likely need a small fortune. XRP may be less popular, but it can bring huge returns if its price decides to increase like 2017.
Of course, these are only forecasts. The cryptocurrency market is rather unpredictable, but skilled investors pay attention to such things as well.
Tech Analysis Ratings
The technical analysis ratings use a more complex approach in order to predict the future price of the cryptocurrency. We need to observe the daily fluctuation of the charts during the past two years and see the tops and bottoms of the price. Then, we’ll take the lowest bottoms and see how high the coin increased in value after they recovered.
The calculations are rather complicated, so there is no need to go in further detail here.
The interesting thing is that according to the tech analysis, the next ATH of XRP may be 20 USD per coin. This is a huge number and a very good sign for investors.
Perfect for Long-Term Investing
Everything mentioned above makes XRP a perfect investment tool for long-term investments. The price will increase as demand grows and the acceptance of the network widens, too.
Yes, this cryptocurrency suffers the same problems as all other tokens on the market. But it also has significant differences —
- it is more protected by the company that runs the network.
- It is more friendly to regulators, thus cooperating with financial institutions and governments will be easier.
Stability is sometimes better than revolutionary changes. When you know that the asset will not just devalue and disappear for no reason, you want to invest in it for the long run, simply because it is a reliable way to store money.
Now, after you know more about Ripple and XRP, you’ll be able to invest wisely. Remember, that you should always make your own research before making any investment decisions, and understand what you do. This article will help you compare the Ripple token with other cryptos.
Let’s summarize and recollect all the reasons why Ripple is good for investing:
- It’s a unique protocol that enables transactions all over the world and helps users send all kinds of assets.
- Low cost and high speed of transactions.
- Hundreds of reputable partners and investors.
- Experienced and talented developers.
- The company grows quickly and develops novel advanced methods of money remittance.
- XRP has a huge potential for growth, too.
After reading this, you know all its pros and cons, its history, how it works, and why banks love it. You can find the same information about any altcoin, and decide what you want to invest in. XRP is a good choice because it wins the competition in many ways — it works faster and cheaper, makes friends with financial authorities, and it is based on a smarter technology, than most of the cryptos.
It does not mean, though, that you should swap all your funds for XRP. It is better to hold multiple assets in a basket to minimize risks. And Ripple’s XRP coins can be one of the profitable positions in your portfolio.