We all are aware of cryptocurrencies and their emergence since the 2008 subprime crisis. There are so many different kinds of cryptocurrencies that came to life since the introduction of Bitcoin. Now, we even have an Ethereum platform that enables you to build applications using blockchain technology. Beyond a point it may seem like nothing can top the invention of Ethereum until we come across Ripple. What makes Ripple any different from other crypto inventions? Let us find out is Ripple a good investment or not.
What is Ripple?
Ripple is a digital payments system that is built using blockchain technology and has its very own currency known as XPR tokens. XPR helps in the quick facilitation of forex conversion among various currencies. It was founded back in 2012 by Jed McCaleb and Chris Larsen.
Initially, Ripple was a peer-to-peer network that used social media to spread awareness. But beyond a point, the network had failed to serve its purpose. Ripple’s well-known crypto token XPR was also introduced in 2012 and the founders gave approximately 80 Billion XPR.
How does Ripple work?
Unlike Bitcoin which runs on Proof-of-Work (PoW) network or Nxt that runs on Proof-of-Stake (PoS) network, Ripple has its transactions run on a consensus protocol that ensures the validity of the accounts and transaction history recorded in the system. So, the consensus maintains the network integrity that ensures that there is no double-spending in the system.
For example, if a user tries to initiate a single transaction on multiple gateways but tries to send the same amount of $500 using the gateway system will have his very first transaction eliminated. The distributed nodes will select the transaction made first and accordingly send a speedy confirmation within five seconds.
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Advantages & Disadvantages of Ripple Investment
|Ripple Investment Advantages||Ripple Investment Disadvantages|
|More Than a Cryptocurrency||No New Ripples|
|Cheap Investment||Concentrated Stake in Few Hands|
|Affiliations & CBDCs||Strong Peer Competition|
|Recovery from SEC fiasco||SEC Case is Work-in-Progress|
Ripple Investment Advantages
- More Than a Cryptocurrency
Ripple is not just another crypto token that is easily available in the market. Ripple is more than any other cryptocurrency or blockchain technology. It is a working company. Ripple Labs has approximately 500 employees that are working full-time with the likes of public relations managers and marketing experts who promote their blockchain-based platform to investors, banks, and even new users.
- Cheap Investment
Ripple is currently trading at $0.57 per coin and is comparatively reasonable compared to the previous high of $3.10 in 2018. The cheaper valuation also ensures that you can pick up a considerable stake in Ripple by spending a few $100. Many of the analysts have given a positive outlook on Ripple which also adds to the investor optimism. Ripple has a market cap of $60 Billion making it the fourth-largest cryptocurrency in the world.
- Affiliations & CBDCs
Ripple has partnerships with the likes of large financial institutions that prefer the advanced blockchain technology offered by the platform over Bitcoin. In 2014, a German bank called Fidor became a major financial partner with Ripple by using their Ripple Payment Protocol, which is a real-time gross settlement system for currency exchange.
In the subsequent years, Ripple has become partners with the likes of MoneyGram, American Express, Santander, etc. which are large institutions. In early 2021, Ripple also announced that they are trying to create a CBDC(central bank digital currency) private ledger based on the technology that is used by XRP Public Ledger. This could be more reliable and cost-effective to carry transactions in the future.
- Recovery from SEC fiasco
SEC sued Ripple back in 2020 claiming that the firm sold XPR tokens worth $1.3 Billion in an illegal arrangement. SEC claims that the firm illegally sold securities rather than crypto tokens. However, the SEC case is very weak against the firm that primarily sells crypto tokens and as a result, there is an unwavering optimism that Ripple might just win the case against the SEC. Even the Ripple prices that crashed to new lows have recovered since from the whole SEC fiasco.
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Ripple Investment Disadvantages
- No New Ripples
Bitcoin has a limitation of 21 Million whereas Ethereum is limitless mining. But all of the production processes are bound to slow down in the future. In the case of Ripple, however, XRP tokens have already been in circulation after the pre-mining process.
- Concentrated Stake in Few Hands
Chris Larsen, Ripple Chairman owns approximately 75% of the overall XRP token whereas Brad Garlinghouse, CEO of Ripple owns a significant portion. Even the board members of the firm have stakes in Ripple tokens. With the XRP stake concentrated in a few hands, the price may remain inflated above their normal levels.
- Strong Peer Competition
SWIFT is one of the biggest payment networks amongst the international players and has been providing stiff competition to Ripple. Approximately 11,000 financial institutions prefer the SWIFT payment system over Ripple. As a result, the firm may take some time to convince the banking players to consider its platform that offers a faster and better payment solution over its peers.
- SEC Case is Work-in-Progress
Ripple may have recovered from the temporary SEC shock, but the ongoing case may yet be another risk in Ripple’s road to success. The SEC may also use unfair tactics to put pressure on Ripple. Previously, the SEC violated some federal rules by acquiring some information from overseas in Ripple’s case. Hence, Ripple is yet to win its case in the court against the SEC.
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Final Note: Is Ripple a Good Investment?
By now it is understood that Ripple is one of a kind cross-border payment system unlike any of the mainstream cryptocurrencies. In 2019, approximately 200 financial institutions have adopted the blockchain technology used by Ripple. RippleNet uses advanced blockchain technology across 40 countries spanning across 6 continents by approximately 300 provider networks. With its growing popularity, amazing technological transformation, and low-risk profile, Ripple makes one great investment in your portfolio.
Frequently Asked Questions: Is Ripple a Good Investment?
Can XRP Price reach $10?
Yes, in the medium term, the XRP price per token can reach $10.
How is Ripple different from Bitcoin?
Ripple is a payment system whereas Bitcoin is a digital currency.
How much will XRP be worth in 2025?
From a medium-term perspective, XRP could hit $10 or even go beyond and hit $15 per token.
Do any banks use XRP?
None of the US Banks have been using the XRP tokens.
Who has a majority stake in Ripple?
Ripple Chairman Chris Larsen owns a majority stake followed by CEO Brad Garlinghouse.