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.
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.
5 Incredible Ripple Facts You Might Not Know
- Bank of England: Conducted a proof of concept test with Ripple, integrating the company’s blockchain technology for simulated cross-border payment.
- Work on the Ripple payment protocol first started in 2004, (5 years before Bitcoin released) under the project name “Ripplepay”.
- A Ripple transaction can involve non Ripple assets such as any currency, cryptocurrency, and other digital assets such as airline miles.
- American Express and Santander have partnered with Ripple for cross-border payments between the U.S. and the U.K. by using blockchain technology.
- Ripple Labs were involved in a lawsuit with rival platform developers R3.
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.
Ripple vs BitcoinHow does Ripple compare to Bitcoin? What are the key differences? See below for our head-to-head comparison:
|Ripple (XRP)||Bitcoin (BTC)|
|Purpose||Centralized enterprise blockchain solution for banks, payment providers and digital asset exchanges||Decentralized digital currency|
|Founder||Ryan Fugger||Satoshi Nakamoto (alias)|
|Market Cap||Over $40 billion||Over $250 billion|
|All time High||$1.35 (December 2017)||$19,908 (December 2017)|
|All Time Low||$0.0002 July 2014||$0.06 (July 2010)|
|How long did it take to hit $100?||Ripple has yet to reach $100||51 months|
|Notable Supporters||Jeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
|Initial Distribution||All XRP was instamined||Mining|
|Mining Method||Ripple is not mined||ASIC|
|Consensus Method||Proof of correctness||Proof of work|
|Network Hash Rate*||N/A||Over 40 BTC per hour|
|Difficulty increase||N/A||Every 2,016 Blocks|
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.
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.
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.
There are two main ways to buy Ripple. Which one you decide to use will largely depend upon your priorities.
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.
You can also purchase Bitcoins through a peer to peer Bitcoin Exchange that does not require an ID. One of the best options is LocalBitcoins which allows users to buy Bitcoin with almost any currency. Once you have the Bitcoins you will then be able to trade these for Ripple at another exchange.
Fortunately, there is a better way to buy Ripple.
What's the Best Way to Trade Ripple?
One preferred option is to not buy Ripple at all and instead to trade Contracts for Difference (CFDs) using a regulated broker.
A CFD is a contract between you and the broker. Instead of buying your XRP directly you would buy a CFD and take a short or buy position. You then lose or make money depending on the direction that the market moves in. This allows you to take advantage of shifts in the market without ever owning a single XRP.
Ripple Brokers Available in
Here’s a list of regulated options available in that offer CFDs and other trading products on cryptocurrencies such as Ripple.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.0%-89.0% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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.
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.
Techcrunch founder, Michael Arrington announced a crypto hedge fund in November that will be denominated in the Ripple (XRP).
“We are launching a $100 million crypto hedge fund. The fund is denominated in XRP. It's actually a pretty perfect platform for a hedge fund if you want to be denominated in a crypto currency I think XRP is perfect for that.”
Source – CryptoCompare Public API.
3 Reasons to Invest in Ripple
- Full Payment System Platform
- B2B Focused Technology
- Instant Interbank Settlement
Full Payment System Platform
Unlike most cryptocurrencies, the Ripple platform is designed in such a way that it can handle the whole transaction cycle. Instead of using third-party services to convert local currency to cryptocurrency, using a third party exchange or wallet to make a transaction and then have the money converted back to a local currency on the other end, Ripple platform can conduct the full transaction on its platform which removes a lot of the confusion and counterparty risk.
B2B Focused Technology
Ripple is designed to be able to be compliant with banking security, risk and privacy requirements such as Anti-money Laundering (AML), and Know Your Customer (KYC) practices. Businesses also operate under similar requirements meaning they would not have to go out of their way and create their own compliance policies which they otherwise would be bound by if they used less compliant cryptocurrencies. This allows Ripple more scope to engage with financial services businesses and bring them into their platform.
Instant Interbank Settlement
Ripple offers instant settlements for interbank transactions. Currently, most interbank settlements, be they international or local, occur on the SWIFT network or local networks that operate in a similar fashion. As sophisticated as these networks are, they rely on decades-old infrastructure and best practices that cannot compete. A SWIFT payment from one bank to another relies on intermediary banks to act as middlemen along the way which adds unnecessary cost and elapsed time to each transaction that as a result can take days to clear. In contrast, a Ripple payment can clear across borders in a matter of seconds.
2 Reasons Not to Invest in Ripple
- News Cycle Exposure
- Narrow Appeal
News Cycle Exposure
Ripple Labs have ambitiously been working on providing solutions to the financial services industry since before Bitcoin was invented, and as such have not made as many inroads as expected. Ripple is still a cheap buy with a lot of upside price potential, but its price is also heavily influenced by external events. If the financial services industry decides to get behind Ripple in a big way, this would have a huge bearing on the price, but this hasn’t happened yet and the market remains volatile and hanging on the next news article that relates to its adoption.
Most cryptocurrencies benefit from their users becoming the biggest users and advocates of their platforms – the more users that buy-in, the more the platform makes an impact on the market. On the other hand, Ripple has a much narrower and pre-defined use case which narrows its metrics for success. This means that Ripple users are more likely to feel a type of disconnect as the success of the platform is more reliant on the efforts of Ripple Labs ability to bring financial services partners on board than it is on its holder’s enthusiasm and advocacy.