By Hassan Mehmood (Saudi Arabia)
XRP is the native cryptocurrency of Ripple, a payment platform introduced in 2012 to make international money transactions quicker, cheaper, and more straightforward.
XRP is a cryptocurrency developed by Ripple Labs, an American technology firm. Ripple Net is a platform that banks and financial institutions may use to transfer XRP swiftly and at a cheaper cost globally. The transfer of local currency to XRP and the sending of coins to a local gateway allow merchants, payees, and banks to convert XRP back to the merchant’s accepted currency.
Banks may utilize XRP to enable the exchange of one currency for another by facilitating the sale of one money. As an alternative to keeping several currencies, they may store XRP and exchange it for other currencies at a lesser cost.
Because XRP is Ripple’s cryptocurrency, purchasing XRP is a kind of investment in the company. If you believe in Ethereum, you can buy Ether, and you can do the same with XRP and Ripple if you think in XRP and Ripple.
Ripple has set itself lofty objectives, and it has made significant progress toward achieving them. According to its website, its RippleNet payments network consists of over 300 financial institutions in more than 40 different countries. That’s a start, but SWIFT is still light years ahead of the competition. It has established partnerships with more than 11,000 financial institutions in 200 countries.
When used on Ripple’s network, Ripple XRP is a cryptocurrency intended to be used to transfer money between merchants and purchasers who use various currencies quickly and efficiently.
How does Ripple Work?
To keep track of the history of each transaction, Ripple depends on a network of independent computers located all over the globe to maintain a ledger of transactions. Another cryptocurrency, such as Bitcoin or Ethereum, operates similarly to this one.
This ledger design is referred to as a decentralized ledger system because it is not stored in a single place. This decentralized mechanism provides more transparency, which banks depend on when sending XRP to other registered financial institutions across the globe over the Ripple network. Banks may now use a more extensive financial network, which they may not have had access to in years past.
Ripple enables a bank or ‘gateway’ to simplify the payment process by converting the payer’s local currency into XRP, Ripple’s digital currency, before processing the payment. When it reaches the receiver’s gateway, it may either be converted back to the merchant’s local currency in a matter of seconds, or it can be retained as XRP.
Should you Invest in XRP?
If you feel Ripple has a promise and that the company is likely to have a good resolution in its SEC litigation, you may consider investing in XRP. Keep in mind that it is a high-risk investment, especially compared to other cryptocurrencies like Bitcoin and Ethereum.
Ripple has the potential to be tremendously beneficial. International money transfers between banks may be time-consuming, costly, and complex to set up, to say nothing of being problematic. As a result, Ripple has already acquired hundreds of collaborations, including several with significant financial institutions, by addressing these issues. Ripple is also supported by a substantial corporation dedicated to promoting and bringing the technology forward.
However, despite its promise, there are various reasons to proceed with caution while purchasing XRP:
The SEC action may have a detrimental influence on it in the future. It is conceivable that Ripple violated securities rules or that the SEC will drag out the issue for as long as possible without deciding.
SWIFT, Ripple’s primary competitor, has already established itself as a dominant force in the banking sector.
The success of XRP and Ripple are not necessarily interwoven in their respective markets. Most financial institutions that deal with Ripple do not utilize the cryptocurrency XRP.
Many of the most popular cryptocurrency exchanges in the United States do not offer XRP for purchase as a coin.
As a result of the recent difficulty with XRP, if you’re interested in purchasing some, the first step is to locate an exchange that offers it for sale. Coinmama and KuCoin are two of the largest cryptocurrency exchanges that now support XRP.
If you consider making a cryptocurrency investment, a widespread tip is only to invest what you can afford to lose. When it comes to purchasing XRP, this is sound advice. Even while it seems to have promise, there is no assurance that it will succeed.
What Makes XRP Unique?
When XRP was first introduced, it was intended to be significantly faster and cheaper than other cryptocurrencies, making it more appropriate for everyday payments. This has now changed. However, it is seldom utilized in this manner since its inventors have shifted their attention to the use of XRP in institutions.
One of the most significant advantages that XRP provides is its ability to be traded for any currency or value (such as gold) with a uniform minimum fee structure.
XRP’s worth is derived from various elements, the most important of which being Ripple’s capacity to collaborate with financial institutions and its ability to be exchanged for any currency or asset in a timely and cost-effective manner.
What is the Total Number of XRP Coins in Circulation?
The total amount of XRP tokens is 100 billion, with 45,404 billion tokens now in circulation and an unlimited supply of 100 billion tokens.
Though Ripple Labs previously controlled 55 billion XRP tokens, with the capacity to sell 1 billion every month, the company has since increased its holdings.
Also read:However, even though XRP’s primary function as an exchange and international bank transfer is still in its early stages, digital currency is now accepted by at least 4,500 businesses worldwide.
What to Look for When Choosing an XRP Wallet
There are a plethora of wallets available for storing XRP. Users may choose the wallet that best matches their needs in terms of security and functionality. A fantastic location to keep your Ripple (XRP) is the Kriptomat exchange, which provides a wide variety of functional alternatives (buying, selling, swapping for other cryptocurrencies) without ever sacrificing security.
How to Earn XRP Through Mining
The term “mining” refers to the distributed verification technique employed by most blockchain-based cryptocurrency projects. As well as serving as a transaction facilitator, it also serves as the method by which additional money is introduced into a cryptocurrency system—typically as a reward to verifiers for their efforts in maintaining the network.
XRP, on the other hand, was “pre-mined,” which means that the XRP Ledger generated 100 billion tokens that were subsequently issued to the public regularly. Ripple holds around 6% of the cryptocurrency as an incentive to contribute to the growth and profitability of the cryptocurrency over time. Additionally, approximately 48% is retained in reserve for regular release into the market via sales.
For understandable reasons, the public has expressed concern about the possibility that an excessive amount of XRP will be released at once, diluting the value of other XRP already in circulation. After all, one factor that determines the value of a currency is the relative scarcity of the money in question.
The contrast between mining and pre-mining may also contribute to its clash with the SEC. The SEC may consider XRP to be less of a currency and more of a security, similar to a stock, subject to different and more burdensome regulations.
Through the first half of 2020, the price of XRP remained reasonably constant, with many medium-term bullish and negative tendencies emerging. Following the upward rise at the start of the year, the price fell for a month, from February to March. The price has since recovered. Even though the following positive trend began in July, it ended in less than a month. The most significant increase occurred in November when the price reached a high of $0.79.
What is Causing Ripple to Rise or Fall?
If you believe anything particular is concealed behind these price swings, you are mistaken. Price movements are just random. Because the critical Ripple trends are strongly associated with Bitcoin movements, even half of the Bitcoin price may impact the XRP price. The cryptocurrency market is following the same pattern as the primary market.
Nonetheless, there were a few noteworthy occurrences that we should highlight. The mood of investors determines the direction of the price of any asset. The element of ripple supply and demand has a significant impact. Jed McCaleb, the co-founder of Ripple, sold 54 million Ripples in April 2020. It should come as no surprise that the stock price fell once the news broke of the incident.
One of the primary drivers of the price of XRP is the signing of new partnerships with major financial institutions. For example, the biggest bank in India, HDFC Bank Limited, joined RippleNet in August. In November, the second-largest bank in the United States, Bank of America, inked a partnership deal with Ripple.
The XRP rate decreased from nearly $0.60 to just under $0.40 in only two days, from December 23 to December 24, 2020. The coin has dropped from third to the fourth position as the most significant cryptocurrency, behind only stable coin Tether in importance.
XRP began the year 2021 at a low point. Only on January 30 did the cryptocurrency burst beyond the $0.50 mark. Immediately after the breakthrough, XRP traded inside a tight $0.40-0.60 band from January until April 4. On April 5, the robust rise began, and it continued until April 14, when the price hit $1.80. (the high of January 2018). Two recent court decisions favoring XRP were the catalyst for the recent increase.
According to CoinMarketCap, Ripple is the seventh most popular cryptocurrency globally at the time of this writing.
However, the market saw a significant reduction in the XRP rate between April and June, which fell by more than twofold, from $1.83 to $0.51. This occurred during the ongoing dispute between the Securities and Exchange Commission and Ripple. Still, the underlying cause was the general unfavorable dynamics of the cryptocurrency market, which had dropped from previously set record highs. In June, the SEC asked that the matter be considered for two months, which was allowed by the court. In the period from June to the beginning of September, the price of XRP grew from $0.51 to $1.39, even though the legal system was at a standstill.
However, XRP could not sustain its positive trajectory, and the cryptocurrency fell by more than 50% on September 7. The collapse of Bitcoin (BTC) was the primary reason for the massive decline. The actual causes for Bitcoin’s decrease on the same day it became legal money in El Salvador were unable to be determined by experts. Usually, such circumstances would cause the price to rise, but not this time.
XRP did not fare as well as Bitcoin when restoring its value. It took two weeks to re-establish the upward trend. The uptrend is still in effect even though the XRP/USD pair has not yet achieved the highs recorded at the start of September.
Now, the price of XRP is determined by rumors, news, and the overall state of the market. If the cryptocurrency industry continues to develop and Ripple is successful in its legal challenge, it stands to earn significantly. However, by investing in XRP, you are essentially purchasing a heightened level of uncertainty. We would advise you to hold off on buying the matter resolved with the court.
Trading, on the other hand, is a different story. The price of XRP is susceptible to any news or rumors, and it exhibits substantial volatility (both growth and drop) as a result of them. By trading, you may place bets on the rise of XRP, as well as on its decline.
XRP vs. Bitcoin
Ripple has challenged Bitcoin’s dominant position in the cryptocurrency market. In reality, the project was years ahead of Bitcoin in terms of protocol development when Bitcoin first appeared on the scene. On the other hand, Ripple did not consider attaching itself to the realm of digital assets until after Bitcoin had already shown its viability.
The participation of Jed McCaleb was essential in bringing Ripple into the cryptocurrency market. Ripple and Bitcoin began to compete more aggressively from that point forward. This was the point at which the story of Ripple and its protocol making Bitcoin obsolete’ began to emerge and be repeated in various media outlets.
However, the price of Ripple’s asset was still hanging around the penny range, while Bitcoin had already made incursions into the four-digit zone. During this time, Bitcoin was experiencing its development spurts, with the difficulties of mining beginning to attract the attention of more considerable commercial interests.
The Mt. Gox controversy also tarnished Bitcoin’s image, demonstrating some of the significant dangers associated with the new world of cryptocurrency trading. However, as time went on, the expanding trading environment helped elevate Ripple’s reputation to the point where it could compete with Bitcoin’s. While the Bitcoin community grew more slowly, with substantial skepticism and failures, Ripple was strategically positioning itself, establishing a solid community and a fresh narrative to complement its technology and business model.
By the year 2017 arrived, Ripple was poised to launch its most significant offensive yet. As the goal of dislodging Bitcoin grew more prominent, both in terms of market valuation and use, it attracted many genuine believers. Around the same time, Bitcoin was also experiencing a mining boom, which demonstrated just how expensive its manufacture was. Ripple positioned itself as a system that did not use a large amount of power while promising to be more scalable than its competitors.
Should You Invest in XRP?
While some may find the vision and advantages of XRP intriguing, White is concerned that the SEC’s action against the cryptocurrency would cause problems for individuals wishing to invest in it. “They are establishing themselves as a settlement layer for regulated corporations, but they are also embroiled in a legal battle with the Securities and Exchange Commission.” According to the executive, none of the clients that Ripple would want to be onboarding will be able to begin using XRP until the company’s legal issues are resolved.
Because of all of the uncertainties, Enneking advises that XRP may be a high-risk investment that is not for the faint of heart. Even though the price of XRP has now more than recovered, “the SEC announcement caused the price of XRP to drop,” as he points out, making this cryptocurrency a hazardous investment until the situation with the SEC is resolved.
That being said, if you feel that Ripple will prevail in its legal battle with the SEC and will continue to dominate the payment system market, it may be worthwhile to invest in XRP. Just make sure it’s with money you can afford to lose in the first place.
Conclusion
For those who feel that conventional banking has to be modernized, but not to the level that other cryptocurrencies offer, Ripple (XRP) is the digital currency to use. The value of XRP is derived from its processing speed and attraction to financial institutions, and it is positioned in the center of the spectrum between conventional money and decentralized finance.
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