Why should you consider ripple as a crypto investment? Buy XRP or not? Ripple is the third-largest cryptocurrency globally and an independent digital asset. Therefore, global financial institutions and liquidity providers tend to use this digital currency to settle their finances.
Ripple is the only centralized cryptocurrency globally connected to the banking world. As it is the only centralized cryptocurrency, there are many reasons to invest your resources in it.
What is Ripple?
Ripple, the company behind XRP, is a payment processing system and currency exchange network capable of processing global transactions.
Ripple is designed to replace SWIFT (the leading remittance network) or replace the settlement layer between major financial institutions.
It is a trusted proxy between two parties in a transaction, as the network can quickly confirm that the transaction has proceeded correctly. As a result, Ripple can facilitate the exchange of various fiat currencies and cryptocurrencies, such as Bitcoin, to name just one example.
Every time a user transacts through the network, the network deducts a small amount of XRP, a cryptocurrency, as a fee.
The standard fee for transactions on Ripple is set at 0.00001 XRP; which is lower than the high fees of banks for international payments.
What is XRP?
So, XRP is a cryptocurrency running on XRP Ledger, a blockchain developed by Jed McCaleb, Arthur Britto, and David Schwartz. McCaleb and Britto find Ripple and use XRP to facilitate transactions on the network.
You can buy XRP as an investment, as a cryptocurrency to exchange for other cryptocurrencies, or as a way to fund transactions on the Ripple network.
In particular, XRP’s blockchain works a little differently than most other cryptocurrencies. For example, other cryptocurrencies open their transaction books and verification processes to anyone who can quickly solve complex equations. Transactions are secure, however, as most ledger owners must agree to verification before and can add them.
XRP’s Ripple network uses a consensus protocol to centralize things to some extent: while anyone can download their verification software, it maintains an impressive list of nodes that users can choose based on which actors they think are least likely to cheat. Validate their transactions.
As new transactions come in, validators update the ledger every three to five seconds, making sure they are consistent with other logs. So, if there is a discrepancy, they stop to figure out the problem. This enables the network to verify transactions securely and efficiently, superior to other cryptocurrencies such as Bitcoin.
Bitcoin transaction confirmations can take minutes or hours and often involve high transaction costs. XRP transactions are confirmed at a lower cost in about four to five seconds.
How to mine XRP
“Mining” is a decentralized verification system used by most blockchain-based cryptocurrencies. It facilitates transactions and provides a mechanism for introducing new currencies into the cryptocurrency system—usually as a reward to validators for their work supporting the network.
For example, Bitcoin has a maximum supply limit of 21 million tokens, constantly releases as more and more verify transactions; by contrast, XRP is “pre-mined,” meaning XRP is “pre-mined”; The ledger has created 100 billion units and regularly releases publicly.
Ripple owns a portion of XRP in circulation, an incentive that helps the cryptocurrency grow and grow over time. Another portion of XRP is reserved for regular release to the market through sales.
This raised concerns that many XRPs were released at once and could dilute the value of other XRPs already in circulation. This is because some of the things that give a currency its value are its relative shortage.
“The company has attempted to reduce uncertainty by implementing various mechanisms (trust, predictable releases, etc.),” said Tim Enneking, Head of Digital Capital Management. However, this difference between mining and pre-mining may also be the reason why 2020 is in line with the United States. So, the Securities and Exchange Commission (SEC) is in conflict.
Ripple advantages
- Fast settlement. Confirming transactions is incredibly fast. It usually takes 4-5 seconds compared to the number of days it takes a bank to complete a transfer and the minutes of time it takes to confirm a Bitcoin transaction.
- Meager fees. The price to finish a transaction at the Ripple community is simply 0.00001 XRP, a small fraction of a penny at modern-day rates.
- Versatile exchange network. The Ripple network does more than just handle transactions with XRP.
- Used by large financial institutions. Large companies can also use Ripple as a transaction platform. Santander and Bank of America are the few using this network, showing that a wider institutional market adopts them than most cryptocurrencies.
Ripple disadvantages
- Somewhat centralized. One of the reasons for the popularity of cryptocurrencies is that; they have been decentralized and deprived of control; by major banks and governments. However, the Ripple system can be centered to some extent; by a standard list of validators that contradict this philosophy.
- Ample pre-mined XRP supply. Stores most of Ripple’s non-circular supply in escrow, but it can introduce large amounts at the wrong time and affect the value of XRP.
- SEC action against XRP. In December 2020, the SEC filed a proceeding against Ripple and said it should have registered it as secure as it could decide when to release XRP. The company denied the claim.
How you can use Ripple and XRP
XRP can be used as a transaction; or potential investment, just like any other digital currency. So, you can also use the Ripple network to handle various transactions, including. Currency exchange.
Suppose you want to exchange the US $ for Euro. Instead of exchanging currencies directly through banks or currency exchanges, you can first exchange US dollars for XRP on the Ripple network and then use them to buy euros.
So, this is a much faster and cheaper approach than paying the high fees that banks and remittance organizations can charge.
Should you buy XRP?
XRP can be gambling, not for the weak. If you think
Ripple will win as a payment system, and XRP may be worth buying. Make sure it’s the money you can afford to lose.
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If you consider purchasing XRP, you can find the most important information here.
So, XRP is currently one of the 10 largest cryptocurrencies. So, if the name is unfamiliar, you may be familiar with the developer Ripple.
With strong use cases and high-profile financial partnerships, XRP has plenty of room for growth. But some obstacles may prevent him. So you need to know a few things before making your next crypto investment.
It’s a cryptocurrency designed for financial institutions
So, the most important thing to consider when investing in crypto is the coin’s purpose. Many people fail in this area because they have no clear purpose or are no different from dozens of other coins.
Unlike other consumer cryptocurrencies, XRP is unique in that it targets financial institutions and payment services. XRP allows banks and other financial companies to transfer funds without pre-funding their accounts in other countries or paying high exchange rate fees.
The purpose is to improve international remittances
So, Ripple has established itself as a competitor to SWIFT, the system most financial institutions use for international money transfers. In addition, it provides a global payment network called RippleNet to facilitate cross-border transactions.
Financial institutions using RippleNet have the opportunity to use XRP for remittances. However, most Ripple partners avoid using XRP because it is volatile.
Transactions are fast and cheap
So, the two biggest advantages of XRP are the speed and low cost of each transaction. For example, the cost of a standard Ripple transaction is 0.00001XRP. So, if the current XRP price is less than $ 1, this is only a penny.
The average transaction time is 5 seconds. So, overall, XRP is a very efficient way to transfer funds.
So, hundreds of financial companies in more than 40 countries have signed up for the use of Ripple. Here are some examples:
- American Express
- Bank of America
- Banco Santander
- TransferGo
- Xendpay
And there is still a long way to go to catch up with the biggest competitors. The big picture is that SWIFT has more than 11,000 partners, while Ripple has more than 300 partners. However, SWIFT has also existed since the 1970s.
SEC has filed a proceeding against Ripple
So, Ripple was involved in a court battle with the SEC. In a proceeding filed in December 2020, Ripple claimed to have sold $ 1.3 billion worth of unregistered securities.
This proceeding is ongoing. That’s why you pay attention to XRP, but if you think autumn will go the way of Ripple, it’s also a reason to invest. The positive consequences of Ripple can lead to higher prices for XRP.
Trading well below the highest since 2018
A significant number of cryptocurrencies broke their previous highs in 2021, except for XRP. Its peak was in January 2018, when it temporarily reached a price of $ 3.84.
The XRP has tracked some of the ups and downs of the rest of the crypto market, with prices reaching $ 1.96 in April. So, since then, it has fallen to about $ 0.84 in writing. The low gain of XRP compared to other coins may result from the SEC proceedings.
So, there aren’t many places to buy XRP in the US
Currently, it is not easy for US citizens to buy XRP. Another result of the SEC proceedings against Ripple is that some of the top crypto exchanges have delisted XRP. Fortunately, there are still several places to buy it:
- Coinmama
- KuCoin
- Uphold
So, XRP is an interesting (albeit risky) crypto investment opportunity. And, now that you know more about it, you can make informed decisions about whether it’s worth the purchase.
The post Why You Should Consider Ripple As a Crypto Investment? Buy XRP or Not? appeared first on Visualmodo.
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