First of all, let’s make it clear that Ripple isn’t just one of those cryptographs that exist for the sake of being there – far from it.
In a scene where far too many tokens follow Bitcoin’s lead, where cryptocurrencies were their own reason to be, Ripple is one of a handful of well-thought-out projects with clear vision, clear purpose, and actual use.
The goal of Ripple as a blockchain is not to become the de facto blockchain people used for transactions in cryptocurrency. In truth, the purpose of Ripple is far from it, its cryptocurrency exists as a way of dealing with payments within its network.
The idea that a wire transfer frequently takes days and high costs (in some cases a wire transfer will set you back $60 – an insane amount of money while taking four business days to process) seems ludicrous in view of the world in which we live. By tapping on our phones, we can know what’s going on in Tokyo. We can make online purchases and deliver our goods within the hour.
We can even immediately send electronic money to others, including any currency exchanges that may be needed.
So why, despite being the anchor of our current economy, are banks so slow?
It’s because they’re using an outdated system, one that was designed four decades ago, and no one has bothered to upgrade it…
How to Start Investing in Ripple
As with most crypto investments, depending on what your end goal is, Ripple can be invested in several ways. Some of XRP’s most common uses are:
Holding the Currency
Holding, or HODLing, is a term used in cryptocurrency trading to describe when a user buys or trades a specific crypto token without the intention of spending it. Many people who made thousands or millions of dollars in late 2017 during the Bitcoin boom did just that – with most of them owning the tokens since 2010, when they were worth less than $2 each.
Investing in Your IRA
One place to think is to use the token for your IRA or portfolio of investments. Typically, people are looking for investments that are likely to maintain their value over time compared to inflation, or other assets that are likely to appreciate but are not likely to depreciate.
Ripple is not likely to suddenly lose its value, as we have already explained, making it one of the best crypto tokens to add to your IRA.
Unlike other tokens that can shed large amounts of value instantly, such as Bitcoin, Ripple is relatively stable, and this situation should get even better as more organizations are investigating potential use cases.
Short Term Trading
For short-term trading, you can also use XRP. Like all interest cryptocurrencies, the price of XRP fluctuates over a short time period.
If you’re looking for somewhat riskier investments that will net you quick cash if done properly, then it’s the investment strategy for you to buy low and sell high in the short term (i.e. for a few days at most). If you want a more intense trading experience, it should also work to try day trading.
Nevertheless, note that short-term or day traders rarely stick to a single currency. In other words, you should not trade ONLY XRP on a day-to-day basis, but rather have XRP as one of several tokens that you trade.
5 Reasons to Invest in Ripple
Ripple Protocol
On the network, Ripple XRP and Ripple IOU run. IOU represents the lack of it more than a currency–after all, IOU tokens created in the Ripple network are just that: debt. According to the Ripple model, IOU tokens can be created by any actor in the network and have no intrinsic value.
Rather, it reflects the actor’s promise to pay a certain amount of an asset to whoever owns the token.
You may issue IOUs for USD as well as for EUR, GBP, JPY, or… chickens. You will grant an IOU token for whatever you choose to use as a payment.
To make it clear who owes to whom, IOU tokens consist of the asset’s amount, the asset’s name, and then the identification of the issuer.
For example, a $55 in IOU tokens would appear as 55 separate USD.companyname IOU tokens in the ledgers – where your identification is company name.
Since IOU tokens are debt notes and can be issued by anyone on the network. However, trust in the Ripple blockchain is an important factor.
Therefore, it is important to make sure that the issuer is an individual you can trust if you receive an IOU token, because IOU tokens can be exchanged just as standard cryptocurrencies can, which means that someone else can pay you with money that someone else owes to you through Ripple (although you can of course still refuse to accept such a deal).
IOU tokens have been designed with the idea that some banks or entities may not want to use XRP due to the volatility of the cryptocurrency, lack of confidence in cryptocurrencies in general, or simply a reluctance to adapt to a new system.
It gives Ripple a way to allow fiat currencies to be traded through the blockchain without actually having them – the Binance blockchain allows you to trade external cryptocurrencies using pegged tokens in more or less the same way.
Partnerships with Banks
The reason you may not have seen a lot of people use Ripple or thinking about it is simple: the blockchain is really about institutions.
Individuals can use it and trade in it, but when used by financial institutions, it really shines. Since most of us are not acquainted with Bank of America’s CEO, it makes sense that we may never have heard of it.
And yes, one of the many institutions that have adopted Ripple is Bank of America. Other major financial institutions currently using the platform include SBI Remit, Royal Santander, American Express, and more importantly, J. P. Morgan, you know.
As a matter of fact, the technology has been adopted by this institution which was hell-bent on destroying cryptocurrencies just a few years ago.
Ripple doesn’t see a lot of use among people, but like any cryptocurrency, it can be traded.
Indeed, since the blockchain on which it depends has a purpose, XRP is one of those cryptocurrencies where the values of logic dictates should increase over time.
Other known banks partnering with Ripple include:
- BBVA
- SEB
- Axis Bank
- eZforex
- MUFG
- Akbank
- Star One Credit Union
- Yes Bank
- Cambridge Global Payments
Speed of Transactions
Sending money with Ripple is fast, even if you’ve probably never heard of it. And yes, many banks have adopted and regularly use their blockchain. Ripple XRP transfers occur in seconds from the start.
For example, if a Canadian bank is required to transfer, say, 5000CAD to an entity in Japan, no additional currency exchanges are required.
The bank is just taking as many XRPs to make 5000CAD, sending them to the Japanese bank via the Ripple network, and calling it a day.
Then the Japanese bank is supposed to change those XRP into JPY (or retain the ripple as part of their liquid assets and transfer the JPY to the customer) so that the transaction is completed smoothly.
Management Team and Investors
Jed McCaleb, who has since gone on to Stellar, invented Ripple. Arthur Britto and David Shwartz were selling the concept, and they were creating Ripple. Today, however, the company is considered to have been founded by Arthur Britto’s trio, Ryan Fugger, and Chris Larsen, with its registered name as Ripple Labs, Inc.
Larsen is the executive chairman of the board. Before the Ripple trip, he created E-Loan, an online lender with a public company status in the U.S.
Ripple’s Chairman, Brad Garlinghouse, also serves on the board. He previously worked as Chairman of the Consumer Applications Unit of AOL. There are six other board members in their chosen fields with varying levels of career achievement.
Google was one of this project’s early supporters. Others include Angel IV of the FF, Horowitz of Andreesen, and Sound Ventures of Ashton Kutcher.
Current Price
Ripple entered the market at 0.004228USD, but trades at 0.266592USD at the moment.
The price rose by more than 3,000 percent in 2017. At the beginning of 2019, when it reached 0.486144USD, it stood at 0.352512USD with its highest peak in July.
In fact, how much it is worth depends, at least as of now, on the status of Bitcoin and the market for cryptocurrency. Ripple has $11.44 billion in market capitalization.
Can I Use Ripple without Spending Money?
Sorry, you can’t do that. While there are many cryptocurrencies that can be mined or staked (the latter being the method of using a given amount of the cryptocurrency to produce more), Ripple entered the market with a fixed, existing market cap.
There is no more XRP added to the blockchain, and there are no plans to do so.
Each month, in reality, new tokens are added to the blockchain, but that’s because of how it operates–more than half of the 10 billion XRP that the parent company owns when it is published.
Said XRP tokens are injected gradually into the market, usually offered first and foremost to financial institutions. Even then, once this admittedly large number of tokens is finished, XRP will no longer be added.
However, there’s more. Behind Ripple, there is one aspect in the architecture that can greatly affect its value over time: Not only will XRP not be released anymore, but the amount of existing XRP will also decrease over time.
This is because Ripple turns the logic behind crypto-mining or staking by design. Usually, there is a transaction fee for the cryptograph that you can either mine or stake.
Each transaction costs a small amount of crypto, which the sender pays for. Generally divided among those mining (or staking) in the blockchain is this volume of crypto.
Nevertheless, Ripple doesn’t give anybody the transaction costs. Then, the Ripple blockchain’s transaction costs just… vanish. In other words, there are fewer XRP tokens every day and that amount is only going to be lower and lower.
Since the laws of economics dictate that a lower supply drives prices up, the prices of Ripple are likely to rise in time, especially if tokens are prevented from being inserted into the economy.
Other Advantages of Ripple
There’s one peculiarity about Ripple that may not matter to some, but it’s certainly going to make a difference for a lot of prospective investors.
There’s a reason for this. And that’s why Ripple, both the blockchain and its token, passed the U.S. and United Kingdom’s no-security token test (deemed not to be a security token).
This means a few things, but the main one is that XRP holders do not have to fear that a possible cryptocurrency law will make their tokens worthless.
This regulation is part of the reason that the service has been embraced by many financial institutions, but its benefits also affect regular users.
We live in a world where cryptocurrencies laws have not been issued by most countries. While crypto trading is allowed almost anywhere, there is the constant fear that it will be totally or partially outlawed.
Even if it is not outlawed (for example, it is highly unlikely to be outlawed in the US), the introduction of formal regulations on the market could affect some tokens, depending on how trustworthy each blockchain is viewed.
Although it can not be said that on this front Ripple is already cleared, because while the crypto regulatory laws are not yet definite, it is certainly one step ahead of its competitors.
By complying with current regulations, the service is now 100% legal. So, even if this changes over time, nothing drastic should be expected to happen as any new law could require Ripple to take some additional compliance steps.
How You Can Buy Ripple
Because you can’t mine or stake in XRP, buying it is the only way to get some of it. Since we assume you’re thinking of holding it instead of using it, you’ll also need your own crypto wallet to hold it while holding it.
You could also keep it in your own wallet, but this might not be a great idea depending on the security rating of the exchange.
A handful of XRP trading exchanges include some of the world’s largest such as Binance and Coinbase.
Ripple recently released a list of exchanges that are officially recommended for those looking to buy or sell XRP if you’re more experienced or would rather jump to the deeper end.
Bittrex, Bitso, and Coins.ph are the preferred digital asset exchanges for ripple. The exchanges are located respectively in the United States, Mexico, and the Philippines.
While going for preferred exchanges may feel more legit, smaller traders do not need to do so. Instead of being trustworthy, these exchanges have been chosen because of their large number of XRP holdings, ensuring liquidity–and are mostly recommended to banks and other institutions that are likely to buy or sell the token in large amounts.
Buy Ripple on Coinbase
While trying to buy XRP, few tips are needed. We compiled a step-by-step list of the entire process for the uninitiated, however, using Coinbase as our chosen exchange.
Therefore, the process would be as follows:
- Register a Coinbase account. At first, you will only need an email and password, but to use most of its features, the exchange requires verification.
- Go through the test. While you can purchase XRP at multiple levels, you should at least aim for level 2 verification (and 3 if you plan to spend the XRP or move it somewhere else). For level 2, you will need to verify your phone number and provide proof of residence.
- Deposit funds into your account at Coinbase. If you’re in the US, this can be done via bank account or wire transfer, with the preferred (faster and cheaper) method being bank account. You can also skip this step and use a credit card to buy XRP.
- Go to the site section Buy / Sell and search for Ripple / XRP. You are going to be shown the price going on. Then you can enter how much you want to purchase.
- Proceed with your purchase
- You ought to have your XRP now. They will initially be stored in the own wallet of Coinbase. If you want, you can use this wallet, although Coinbase is known for sometimes closing accounts if they disagree on moral grounds with whoever you send money to.
- You can always sell your XRP for fiat. You can also withdraw your XRP into a crypto wallet that supports the currency if Coinbase verifies level 3.
- Despite the fact that Ripple has both XRP and IOU tokens, most exchanges do not trade IOU tokens. Therefore, you should assume that people are talking about XRP when trading “Ripple.”
Should You Invest in Ripple?
Ripple has reached a reputation level that’s great. It’s known for its low charges and speed and therefore has become the best money transfer medium. While many may wonder why it took so long to have an alternative to traditional wire transfer, Ripple certainly meets the need. And before it did, no major institution sought to change the status quo.
That’s how Ripple came into being. Although banking could be streamlined without using the blockchain, with the intention of managing financial systems, blockchain technologies were developed.
At present, there is already enough incentive for the world’s financial system to implement blockchain systems.
Ripple’s solution is simply elegant: just as Bitcoin’s blockchain uses its nodes ‘ processing power to authenticate transactions, so the Ripple blockchain can use its users ‘ processing power to authenticate transactions between banks.
So, there’s never a time that would be unaccounted for money sent through Ripple. The reason is simple: it makes money transfers with no hidden layers in between a sender and receiver.