How to Trade Ripple

In this guide:

  1. Why You Should Care About Ripple
  2. History of Ripple
  3. What is Ripple?
  4. How are Ripples Made?
  5. Reasons You Might Trade Ripple
  6. What Drives the Price of Ripple?
  7. How High Could The Price of Ripple Go?
  8. Current Ripple Price
  9. How to Buy Ripple

Why Care About Ripple?

There are plenty of reasons to be excited about Ripple. Cryptocurrency has come a long way since Bitcoin burst on to the scene all the way back in 2009. Today there’s a plethora of cryptocurrencies to choose from, all with their own specific niche.

Ripple and the Ripple network have the potential to completely change the way that we approach currency transfers. Big banks and small-time traders have all begun to take notice and Ripple is one of the most successful Altcoins.

The question is, what is Ripple and what makes it so special?

A Brief History of Ripple

The precursor to Ripple has existed since 2004 in the form of Ripplepay. It was designed by Ryan Fugger in order to create a decentralized monetary system that could let individuals and communities create their own money. This eventually led to the creation of Opencoin.

In 2012 Opencoin began developing the Ripple Transaction Protocol. This was designed to allow the trade of any sort of currency imaginable without the long waiting times and fees that plague regular banks. This eventually led to the creation of Ripples or XRP to help financial institutions transfer money with minimal fees. Opencoin then rebranded itself as Ripplelabs in 2013.

Since then Ripple has focused on the banking sector. An increasingly large number of traditional financial institutions have expressed interest in the Ripple Network and this shows little sign of slowing.

What is Ripple?

Ripple is the name for both the digital currency XRP and the open payment network within which the currency is transferred. Ripple was founded in 2012. It was designed to complement rather than compete with cryptocurrencies and fiat currencies. Ripple’s goal is to enable secure, instant and nearly free global financial transactions. it is used by many banks as the basis of their own settlement infrastructure. The currency itself, XRP, has consistently been one of the five largest cryptocurrencies by market cap.

Ripple is designed to work with the Ripple Network (RTXP). The Ripple network allows real-world assets to be transferred between two parties using a process called an issuance. For example, a bank may want to transfer a real-world asset, like gold, to another institution. To do this the bank adds the gold to the Ripple network and then transfers the asset to a “trusted party” who can reclaim the goods. This allows the trade to happen without any transaction fees.

A small amount of XRP is taken during each transaction. This isn’t to compensate traders. Instead, the Ripples are irrevocably destroyed. This prevents users from spamming the network with requests.

Put simply, Bitcoin and Ethereum are more like bank accounts. Users can trade them in exchange for goods and services. Ripples are designed to be a passageway for transactions to take place and as a bridge between other currencies. It was never really intended to be a stand-alone currency like Bitcoin and Ethereum.

How are Ripples Made?

Unlike the majority of other cryptocurrencies, XRP is not “made”. Instead, it was all insta-mined during the genesis event. XRP are not really designed to be traded in the same way as Bitcoin or other cryptocurrencies.

Instead, they act as a way to protect the system from being spammed and help to convert real-world assets into issuances.

Should You Trade Ripple?

Ripple serves a different purpose than other cryptocurrencies. It was never designed to be a traditional investment. This doesn’t mean that you can’t make money trading in Ripple. In fact, its many different uses mean that XRP has a chance of attracting supporters from the financial sector, which could lead to an increase in value. An important factor to consider is that the fate of Ripple is tied to the fate of the RTXP network.

Ripple has already gained the backing of several major financial institutions. The altcoin is will probably not see any major increase in value in the short term, rather it may see a steady increase in value as more institutions adopt RTXP.

An attractive reason to trade Ripple is the very low token price. You could purchase large numbers of XRP now and hold on to it. This way you will benefit from any price surges.

What Drives the Price of Ripple?

Major cryptocurrencies tend to rise and fall in tandem and Ripple is no exception. If you see a big rise or fall in the value of Bitcoin or Ether then expect to see Ripple follow suit. As with all other cryptocurrencies, Ripple is volatile. You should expect to see fairly dramatic fluctuations in value.

Media interest plays a big role in the price of Ripple. As cryptocurrencies hit the headlines large numbers of new traders tend to pour in. This inflates the value of cryptocurrencies across the board. This kind of rise is usually followed by a pronounced dip as early traders engage in profit-taking. You should keep a close eye on the headlines when deciding how to invest in Ripple.

Ripple, in particular, sees large boosts when it is adopted by established financial institutions. XRP saw a surge in value in May of 2017 when SBI Ripple Asia announced the creation of a Japanese Bank Consortium designed to facilitate cross-border payments. Ripple is also prone to regulation aimed at curtailing cryptocurrencies but its role as a bridging currency provides it some protection.

You should also keep an eye out for changes in Asia, while China has recently become more hostile to cryptocurrency Ripple’s utilitarian nature may mean that it will be taken up by firms like Alibaba in order to facilitate faster payments. If this happens, expect to see a huge surge in the value of XRP.

The key driver of price for Ripple will always be the number of users of the RTXP network. The more support that Ripple’s open network gains the more value your Ripple investment will take on.

What is the Price Outlook for Ripple, and What Do Experts Say on Prices?

Ripple’s price outlook in the short to medium term is fairly stable, especially if you want to trade using fiat currencies. The value of Ripple to USD has broadly followed its market cap although the value of XRP to BTC has been more volatile. This makes sense as Ripple is designed as a bridging currency.

You shouldn’t expect Ripple to hit $1 anytime soon but it is still arguably a solid long-term prospect. It will likely see steady growth as the number of users increases.

The long-term outlook for Ripple is good. While experts fret about looming regulation it is unlikely Ripple will be adversely affected. The unique utility of RTXP means that it may find allies with traditional financial institutions.

Ripple will also do well as speculation begins to subside. Currencies with a strong utility will become more valuable. Peter Smith, CEO of Blockchain, has argued that there will be a big need for “cross border transactions”. This is an area that Ripple already excels in. The future might be rocky for cryptocurrencies but Ripple is poised to do well.

What is the current price of Ripple?

You can see the price of Bitcoin and other leading cryptocurrencies below:

How to Buy Ripple

So you’ve decided that you want to take the plunge and trade Ripple. The next step is to figure out how to acquire some XRP.

The best way to acquire Ripple is through a cryptocurrency exchange. This involves exchanging your fiat currency for XRP. Unfortunately, using an exchange can be a risky prospect. The exchange represents the first fault in your security and you are relying on them to follow best practices.If an exchange does not properly protect itself then it could risk getting hacked, putting your investment at risk. It can also be difficult to resolve disputes should a problem arise, especially if the exchange is based overseas.

The best way to buy Ripple is to first buy Bitcoin using Fiat currency through an exchange. You can then trade this BTC for XRP. A good choice for buying Bitcoin is Coinbase.

There are a lot of different Bitcoin exchanges out there but Coinbase will suit the majority of traders. One of its most useful features is the ability to buy Bitcoin either by bank transfer or with a credit/debit card. These transactions generally come with low fees. Coinbase charges 1.49% if using a bank transfer and 3.99% if using a credit or debit card. This fee rate is competitive compared to the rest of the market.

It should be noted that Coinbase requires you to provide your ID in order to trade in cryptocurrency. This helps to prevent the exchange being used for criminal activities like money laundering. It’s considered best practice and the more reputable exchanges almost always use some form of Identity verification.

Once you have acquired your Bitcoin the next step is to convert it to Ripple. One of the better exchanges to trade BTC for XRP is Kraken. Once you have signed up for an account and jumped through the verification hoops you will be able to transfer your Bitcoin to your Kraken wallet. Then you’re finally ready to trade your bitcoins for some ripples.

Kraken is a reputable exchange and you are unlikely to encounter any issues. The main advantage of trading with Kraken is that they have a large number of currency pairs. This means you will be able to trade your XRP for a variety of other altcoins and fiat currencies.

Remember that you will need to take extra steps to protect yourself when using exchanges. Always enable two-factor authorization and if possible try to avoid keeping all of your coins in a single wallet and make sure that you keep your access codes somewhere safe. If you lose them you may not be able to access your XRP.

Also, remember that you should never leave coins in your exchange wallet unless you are planning to trade them. The best way to secure your cryptocurrency is in a hardware wallet or by putting them in cold storage. This involves keeping your cryptocurrency in an offline wallet that only you have access to. Remember, you are entirely responsible for your own security. If you don’t own your wallet, you don’t own your tokens.

No matter which exchange you use, never invest more than you can afford to lose

Any investment is a risk and XRP is a particularly volatile commodity. When you’re considering how to buy Ripple you need to remember that even if you use more reputable exchanges like Coinbase and Kraken you can still lose your entire investment.

Investing in Ripple is the same as any other investment. Make sure that you always follow the golden rule, Only invest what you can afford to lose. If you stick to this and keep your tokens in a cold wallet then you are on the right path to making the most of your Ripple investment.

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Meet Your Cryptocurrency Expert

By Saul Bowden

Saul is our resident cryptocurrency expert. He spends his days searching for the next Bitcoin. A longtime advocate of blockchain technology, Saul believes that cryptocurrency represents so much more than an excellent investment, it represents the future of finance.