As an investor or crypto trader, Ripple might be the missing piece in your investment portfolio. Just like Litecoin and Bitcoin, it is another form of cryptocurrency, but more like a payment protocol for streamlining international and cross-border payments around the world.
Ripple is not an average cryptocurrency because it offers something different from other cryptocurrencies. However, no matter how promising it sounds, you must understand what it is, how it works, and every other feature to look out for before investing.
What is Ripple?
Ripple is a technology that functions as a cryptocurrency (XRP) and a digital payment platform for financial institutions. It was co-founded by two computer programmers, Chris Larsen and Jed McCaleb, in 2012.
The systems responsible for financial payments are always congested and complicated. This, in turn, makes the payment process time-consuming, costly, and unreliable. But Ripple serves as an alternative platform that facilitates free, secure, and instant cross-border payments. It also covers payments in every type of money, including cryptocurrencies.
A year after XRP was released, Ripple Labs became one of the 50 smartest new companies by researchers at MIT University, which is among the best private research universities in the world.
And ever since then, over 100 financial institutions have adopted Ripple’s technology. Some of the biggest companies that adopt Ripple include American Express, Santander, and MoneyGram – a US-based money transfer company. There are also speculations that VISA and Western Union are considering adopting the platform in the nearest future.
Many crypto analysts also believe that XRP can replace SWIFT as the number one network for secure and reliable global payments. And that is what the founders plan to achieve.
To enable you make an informed decision about your next market option, here are the benefits and downsides of investing in Ripple.
Benefits of Investing in Ripple
- Affordability: Ripple is currently trading at $0.24 per coin. This makes it cheaper than its previous high level in 2018. In 2018, the cryptocurrency hit an all-time high of above $3.10, but some market analysts believe it will push beyond the $1,000 barrier within the next ten years. Other predictions even sound unrealistic. So, considering its low price and increasing adoption, investing in Ripple is a relatively low-risk option with the potential of a huge ROI.
- It solves problems and creates opportunities.
- In addition, it provides solutions for large financial institutions, as it speeds up transactions. And it is compatible with small business owners, too. Once it becomes widely adopted, the Ripple platform will give millions of entrepreneurs access to the global economy.
- Market cap: Ripple has a market cap of $13 billion, and that makes it the world’s third-biggest cryptocurrency. A large market cap is also a sign of investor confidence and makes the asset very resistant to volatile market cycles.
- Ripple is more than a cryptocurrency: It is a full-fledged company. Ripple Labs Inc has more than 500 full-time workers, including marketing specialists and public relations who promote the technology to banks, investors, users, and the general public.
The downsides of investing in Ripple
Investing in Ripple is just like any other investment that comes with its risks. Here are some of the cons you should consider before investing.
- There won’t be any more new coins, as all XRP coins are pre-mined and are already in circulation.
- Ripple owns a big amount of XRP. Chris Larsen and Brad Garlinghouse also hold a significant amount, as do other executive board members. With so much XRP confined in just a few hands, there will likely be a surge in price.
- It is not decentralized. According to some blockchain purists, XRP is not a ‘real’ cryptocurrency. Many even argue that it contradicts the principles of decentralization and economic autonomy. Unlike Bitcoin that is mined and then exchanged anonymously between users, Ripple is primarily designed for the banking and finance sector.
- Ripple’s biggest rival in the market is SWIFT, which is currently the biggest international payment platform and the most preferred network for over 11,000 financial institutions. Ripple has a lot of work to do in convincing these institutions that its payment protocols offer better, more reliable, and faster financial services than SWIFT.
Most investments focus on risk management and reward factors. Therefore, in your opinion, consider if the potential rewards outweigh the possible consequences of the risks involved before investing.