Buy Ripple – Forex Academy

When selecting a good crypto investment (actually any investment), even seasoned investors can never be too sure. Ripple is one of the several offerings investors can choose from, and no doubt, it has its fair share of both risks and prospects, just like all other crypto investments.

Ripple’s (XRP) 2020 performance has shown fluctuations similar to Bitcoin and Ethereum. While part of this performance trend may be attributed to Bitcoin’s overall influence on the crypto market, there are XRP-specific forces attributed to the trend. As an investor, it is worth looking at these forces and XRP’s overall outlook to establish whether this is a good time to buy Ripple.

This article will look at how XRP has been performing over the last 12 months and the factors that might shape its outcomes in the next several months.

A Brief Background on Ripple

Ripple was introduced in 2012 as a real-time gross settlement (RTGS) solution. It enables financial institutions to send money instantly in a secure manner across the globe and at cheaper rates than previously possible. Besides the payment infrastructure, Ripple has the XRP currency, which can be used for trading and investment.

2020’s Performance

XRP started the year at $0.92, and within two months, it had gone to a low of $0.34. In the next month of March, the currency fell to its lowest, exchanging at $0.14. During this period, both Bitcoin and Ethereum were also struggling to fetch competitive rates against the dollar. As such, it is safe to assume that XRP’s performance up to this point was largely a reflection of the economic outlook of the cryptocurrency economy.

From mid-March, XRP grew slightly and seemed to avoid fluctuations until August, when it shot up to $0.31. Again, this spike closely resembles trends observed on Bitcoin and Ethereum, where the two showed some of the highest figures in 2020. From August onwards, XRP has maintained an average of $0.25.

From XRP’s 2020 financial performance, we can conclude that external forces heavily influence the currency’s outlook in the cryptocurrency economy. Nonetheless, there are unique aspects that either make XRP a good choice for investment or make it a matter that should be put on the shelf in the meantime.

Partnerships and Approvals

Besides the fair financial performance, Ripple has had a lot else going on – 2020 is the year RippleNet made numerous partnerships with banks and other financial institutions. The aim was to help these organizations achieve cheaper, faster, and more secure money transfers worldwide. Notable industry players such as Bank of America, HSBC, and Western Union have tested the solution giving it their vote of confidence.

Ripple is also increasingly being loved by regulators. The UK Financial Conduct Authority acknowledges XRP as a utility token – a privilege only previously granted to Bitcoin and Ethereum. In the US, Ripple is in good standing with the Securities and Exchange Commission. The currency is also available on all major exchanges, which further strengthens its brand. Positive news about Ripple has also contributed to an increase in the crypto’s appeal among the investor community.

2021 Outlook

2020 has been quite eventful for Ripple. 2021 might see an increase in activity considering that many of the partnerships the company announced will be maturing in 2021. When these partnerships finally take shape, we’re likely to see FOMO buying due to increased positive news about the currency. In such a case, prices will certainly surge, and predictions of XRP/US exchanges at $1 are not far-fetched.

We have also seen how Ripple’s performance follows Bitcoin’s trend. At the moment, Bitcoin is on the upward projectile, and this growth is likely to continue for several months. There have been substantial fluctuations between resistance and support, but each cycle since July sets a new high. Based on this history, it might take some time before Bitcoin reaches its ultimate resistance and prices start to crash. Since XRP trails Bitcoin’s performance, its investors might have even more time to decide if they need to jump out.

Advantages of Buying Ripple

#1: It Solves Real-World Problems – Financial institutions have long struggled with transferring money fast and cheaply across the world. Currently, most cross-border money transfers are powered by SWIFT. But this messaging technology is slow and expensive. Ripple’s alternative solves these two age-old problems and thus, makes for a good competitor. The best way to create value, they say, is by solving people’s problems. As Ripple continues to address these challenges, we can only expect its value to grow.

#2: It Is Currently Affordable – Well, it’s not really affordable considering that it is not a commodity. However, the idea that you can get several hundred XPRs for just $100 is refreshing. As an investor, high volumes are usually satisfying. While XRP currently seems affordable, this might not be the case in the next year or so. Based on the analysis in this article, XRP prices are likely to shoot next year. Come 2022, and your $100 might only afford you 100 XRP.

#3: It’s Got a Huge Market Capitalization – So what does it matter? Market cap is a good indicator of the stability of a company. It does not guarantee anything, but a huge market cap suggests that the market is conservative. This is a good thing for investors with a low-risk appetite because they fancy markets that seem stable, albeit this comes with the promise to oneself that they will not expect anything more than modest returns. Ripple has the third-largest market cap (after Bitcoin and Ethereum).

#4: Ripple Has Professional Support – While hardcore crypto-enthusiasts think this is undesirable interference, it actually has many benefits. For instance, Ripple’s engineers always ensure the platform is stable. But perhaps, the greatest benefit of this “interference” is that Ripple Labs Inc. can promote the product to financial organizations. These marketing efforts will certainly promote the adoption of Ripple among financial organizations. The result will be a steady growth of the platform, including the XRP currency.

Ripple’s Challenges

There are many sweet things we can say about Ripple. On the flip side, Ripple has some challenges that are worth highlighting.

No new XRPs are being mined, and nearly half of the existing ones are in the hands of, well, the wallets of the company’s directors. If they decide to dump their share, XRP might be badly devalued. This is just a hypothetical situation, and willing investors must assume the company has a future such that the directors will see no need to dump their coins.
Financial institutions are conservative. This means that, despite the promotion efforts the company is making, it may take a long time for the platform to be fully adopted.

Final Thoughts

Ripple has had a fairly impressive outlook so far. It has shown slow but steady growth in 2020. Although its price remains low compared to previous performance, there are all indications that the currency will become stronger in the coming year. There are several projects in the pipeline, as well as promote efforts to boost the platform’s adoption. It might take long before these results are realized. But all factors considered, there is good reason to believe that this is a good time to invest in Ripple.

Introduced in 2012, Ripple aimed to facilitate seamless, fast, and cheap global money transfers. It is different from other cryptocurrencies in the way it works and what it aims to achieve. Bitcoin came as a digital currency and Ethereum as a smart contracts platform. But Ripple entered the scene as a payments infrastructure. Today, its digital currency is among the most popular – only surpassed by Bitcoin and Ethereum in market capitalization.

In this article, we take a deep dive into this fascinating cryptocurrency network. We will look at how Ripple works, its pros and cons, compare it with Bitcoin, and even look at how you can use it. Read on to find out more about Ripple.

Understanding Ripple

We’ve just said that Ripple is different because it is a payment infrastructure. But what exactly is a payments infrastructure? In the interest of simplicity, let’s say it is any platform that facilitates the transfer of funds between individuals. For Ripple, this transfer happens in real-time and on an individual order basis. In other words, this network is a real-time gross settlement (RTGS) system.

The Ripple platform consists of the XCurrent messaging technology and the XRP currency. SWIFT is currently the most popular inter-bank funds transfer system. However, the recent adoption of the XCurrent messaging technology by some leading global banks has created uncertainty over SWIFT’s future.

Ripple was created by Ripple Labs Inc. Unlike another crypto, which is usually generated through mining, Ripple Labs created the entire 100 billion XRP that circulates within the network. The company, strangely, holds 55 billion of these.

While Ripple runs on open-source software, the network is not really decentralized – which the executives of Ripple Labs’ vehemently refute. The CTO is quoted saying that the XRP ledger existed even before Ripple Labs was founded, and that XRP will continue to circulate even if the company collapses. Cryptocurrencies are loved because they are decentralized. For Ripple, the company’s involvement in developing the network complicates the matter. Nevertheless, it remains the third most popular crypto going by total value of coins in circulation.

Current Applications

Ripple’s utility extends beyond sending crypto from one person to another – the company’s recent partnership with Banco Santander demonstrated its potential in facilitating RTGS in mainstream banking. According to the Financial Times, this partnership allows the bank’s customers to send money across the globe in different currencies. That said, Ripple is mainly used for currency exchange and remittances.

While the banking industry may be shy in adopting XRP because it’s volatile – like all other cryptos, it is likely to embrace Ripple’s payment infrastructure. Should that happen, Ripple will enable banks to make instant transfers and in different currencies while avoiding the high costs associated with SWIFT.

Ripple Versus Bitcoin

Ripple and Bitcoin are both blockchain-based technologies. This similarity should not make you think that Ripple is simply another cryptocurrency, just like Bitcoin. These two fundamentally differ in the following ways:

Mining: Bitcoin miners get rewarded with new coins. Ripple is not mined as all the coins were created when the network was built.
Underlying technology: Bitcoin transactions are verified using the proof-of-work concept (mining), while Ripple uses an iterative consensus.
Speed: Bitcoin takes an average of 10 minutes to commit transactions, while Ripple needs only 5 seconds. Ripple’s fast speed is what makes it suitable for RTGS.
Transaction cost: Bitcoin charges upwards of $2 per transaction, while Ripple costs about $0.004. The low transaction fees give Ripple an edge over SWIFT for remittances.
Supported currencies: The Bitcoin network supports only once currency while Ripple was built to support any currency.
Ownership: Bitcoin is decentralized, while Ripple is controlled by Ripple Labs Inc.

How to Use Ripple

Ripple can be used by both individuals and financial institutions. For individuals, it works like other cryptocurrencies – you can invest in it or use it to make payments. For banks, Ripple’s usefulness lies in its payment infrastructure technology. Let’s take a closer look at how the platform plays out in these two scenarios.

For Individuals

As mentioned above, you can invest in Ripple (XRP) or use it for payments – just as you would with any other crypto. For this, you will need a digital wallet that supports XRP. There is a good review of XRP wallets on this page. Secondly, you need to identify a reliable exchange from where you can buy XRP; Bitstamp, Kraken, and GateHub are good options. Most of the exchanges offer XRP/USD, XRP/EUR, and XRP/BTC exchange pairs. Also, most of them will deposit the purchased XRP on your account on that website. Always ensure you move the funds to your private wallet soonest possible.

For Banks/ Financial Institutions

Ripple was developed with banks and other financial institutions in mind. The aim was to make cross-border fund transfers fast, cheap, and transparent, which banks have been unable to achieve for decades.

Ever since, banks have been using SWIFT, an interbank telecommunication system, to send money across borders. SWIFT is expensive. Also, its transfers take about 1-4 business days to reflect. People seeking to make cross-border remittances have had to endure this reality for the last four decades. However, things are changing. Several major banks have seen the light and are now using Ripple’s messaging system to achieve the same function as SWIFT, but faster, more cheaply, and transparently.

Just like SWIFT, Ripple’s payment infrastructure does not hold any funds – it is simply a messaging system. This means that banks do not have to overhaul the entire remittance process when adopting Ripple, and thus, the switch to Ripple should be swift (no pun intended).

Having cheap, instantaneous cross-border transfers is everyone’s wish, but until all banks adopt Ripple’s platform, such transfers will have to stay on the wishlist.

Ripple’s Pros

Fast transactions – Transactions on Ripple are among the fastest among cryptocurrency networks. Within 3-5 seconds, the transfer of funds from person A to person B can be complete.
Supported by a reliable technical team – Ripple is supported by a team of world-class engineers because the company can afford them.
Reliability – The platform has been tested by some of the world’s largest banks, meaning it is a reliable solution.
Low cost – Transaction fees on Ripple are very competitive.

Ripple’s Cons

Centralized – Ripple Labs owns 55% of the total coins in the network, which makes it too powerful. Decentralized governance is one of the characteristics that have made cryptocurrencies attractive.
Focus on banks/ financial institutions – Ripple was largely designed to benefit banks and financial institutions. Individuals might be unable to leverage the platform’s full range of capabilities.

Closing Remarks

Ripple is an original, fresh, and unique solution to the age-old problem of cross-border money transfers and, as a digital currency, an alternative to Bitcoin. We have seen that the crypto network is primarily focused on financial institutions. However, you can still use XRP to make payments or invest in it. So, if you are a crypto enthusiast, XRP is a good alternative to other altcoins.

For financial institutions, Ripple introduces speed, low-costs, and transparency in international money transfers. Many of the world’s largest banks have already tested its payment infrastructure – giving it the seal of approval that other financial institutions can rely on. Ripple promises faster and cheaper money transfers. However, we might have to wait for long as banks consider its adoption. Until then, we will have to endure the slow and costly SWIFT transfers.