What is Ripple XRP? (A guide on investments in 2018)
Global remittance is big business, it’s because of this 600 billion dollar business Ripple has become a giant piece of the cryptocurrency Pie in 2017. In large part due to the growing number of relationships, they have with the traditional financial system. In short, Ripple is a blockchain method to settle transfers between ripple gateways.
If you already know what ripple is you can skip to is Ripple (XRP) a good Investment?
The open-source nature the blockchain has allowed developers to create a wide range of new cryptocurrencies. All thanks to Bitcoin after its inception in 2009. Ripple is not a copy of Bitcoin. It does, however, share many of the same decentralized ledger keeping properties similar to Bitcoin. That part is highly debated with many in the community saying ripple is not a cryptocurrency at all. Mostly because new coins are not mined into existence.
What is Ripple?
Ripple has two separate parts. As a payment protocol and a cryptocurrency. Created by San Francisco-based Ripple Labs in 2012. Ripple Labs is a venture capital-backed startup that develops global payments solutions. Specializing in assisting traditional fiat financial institutions. In the past five years, Ripple Labs has created a real-time gross settlement system (RTGS), a currency exchange, and a payment network called RippleNet.
According to Ripple Labs, “Ripple connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one frictionless experience to send money globally,” and all of its transactions are recorded on the decentralized XRP Ledger.
Ripple as digital currency is native to the RippleNet payment network. Ripple carries the ticker XRP, is currently the fourth largest cryptocurrency in the market with a market capitalization of over $6.5 billion. Ripple is used in the Ripple payment network to make transitions and pay transaction fees. It is also necessary to be held as a reserve in wallet addresses that uses the system. Ripple transactions take less than four seconds and over 1000 transactions per second can be processed on the system.
How does Ripple work?
If a company in the U.S. wants to pay a supplier in Mexico. Usually would need to pre-fund an account in Mexico or use an expensive money transfer operator. Even that operator will take several days to complete the payment. Using ripple, the U.S.-based company, agreeing with the Mexican supplier to accept this form of transaction, can make the payment instantly. The cost from end to end is always meager. The supplier then receives the ripples that can be turned into Mexican pesos using a ripple gateway.
Ripples growth in 2017
At the time of writing this article, the price of one ripple stood at $0.168040. Ripple is one of the best performing digital assets in 2017. Year-to-date, the return on investment for ripple holders has been over 2,500 percent. In May, ripple hit it’s all-time high when it peaked at around $0.40.
Many believe 2018 only means greater growth as the coin is now listed on 50 exchanges worldwide. Proving they deserve the support of the community by following through on the promise to place the remainder in an escrow.
Ripple Labs has become the leading blockchain technology provider for payments and settlement solutions for financial services companies. Currently, Ripple Labs has over 75 global banks and other financial institutions as clients.
Ripple Partners with MoneyGram
Ripples recent partnership with MoneyGram bodes well for those invested. Brad Garlinghouse, CEO of Ripple said in response:
“The payments problem doesn’t just affect banks, it also affects companies like MoneyGram, which help people get money to the ones they care about.” “By using a digital asset like XRP that settles in three seconds or less, our clients can move money as quickly as information.”
On-demand, liquidity means less moving money around. Less moving money means fewer fees. For the people sending around 600 billion every year, this means big savings.
Of course, MoneyGram is not the only big name on ripples website. They bost 75 commercial deployments. Including other well-known names such as American Express, Santander, and BBVA. Today no one is using XRP in the wild. However, the continual stream of financial institutions working with ripple can only mean good things.
Ripple’s Unpopularity in the Bitcoin Community
Ripple has grown into one of the most valuable digital assets in the market. Unlike most of the other top 10 market cap ripple has been around for a while. Even still not everyone in the bitcoin community is a fan of ripple.
Bitcoin started out to provide financial sovereignty to individuals. This allowed anyone to “be your own bank.” Due to the libertarian roots of many Bitcoin community members, there is a growing feeling that ripple is going against the very foundation that cryptocurrencies were built on.
However, this argument is just based on your interpretation of the point of Bitcoin. Only because many people join the Bitcoin community because of the financial freedom it provides does that make it the foundation?
Ripple, is “colluding” with the banks as it is helping banks drastically reduce costs on payments and remittances. This does not bode well for the die-hard “be your own bank” community members who see bitcoin as an escape from that system. For those that believe the technology can and should be used for the good of all ripple is a breath of fresh air to the dusty old fiat financial system.
Furthermore, critics of ripple also highlight the cryptocurrencies lack of decentralization. While the XRP Ledger is decentralized, Ripple Labs has created all coins (pre-mined) before the launch and still owns over half the total supply of ripple. This too does not resonate well with part of the community’s who affections is with true decentralization.
A cryptocurrency supply structure has a significant influence on its price. It is essential to understand how the supply for a specific currency is managed before investing in it. Ripple is very different from most other cryptocurrencies in the way its created and mined.
All ripples were created in 2012 with the launch of the coin. The total supply of coins is 100 billion. Currently, around 38.3 billion ripples are in circulation. Ripple Labs still hold the rest.
According to an announcement by the company in May 2017, Ripple Labs plans to lock up over half of the supply of ripple (55 billion XRPs). They will release one billion ripples into the market each month for 55 months. This is intended to remove any uncertainty surrounding ripple’s future supply. In the statement, it also said that Ripple Labs has sold on average 300 million XRP each month for the past one and a half years.
A large number of ripples are still held by the company is a significant point of concern for ripple holders and potential investors. As this type of behavior is typical of exit scams. These concerns have been addressed. It is not yet clear how the price of ripple will perform once the new tokens start to hit the market. Who knows if there will even be enough demand to meet the incoming supply from money transmitters.
Where to Buy And Store Ripple?
Ripple can be bought and sold on most major cryptocurrency exchanges, including Kraken, Bitfinex, Poloniex, and BitStamp. The digital currency can also be purchased from cryptocurrency brokerage platforms such as Changelly. Lastly through the wallet provider and exchange GateHub.
GateHub is the most popular wallet for ripple holders. It also provides an exchange where users can buy and sell ripples against a range of fiat and digital currencies. GateHub is used by both companies and individuals.
Other ripple wallets include Rippex. A desktop wallet for Linux, Windows, and iOS. It also works with the hardware wallet Ledger Nano S, which has been supporting ripple since May 2017. Hardware wallets are the most secure option for individuals looking to buy and hold ripple. Anyone with any cryptocurrency should use cold storage. Hardware wallets are almost always the most secure option.
It is important to note that if users want to activate a ripple wallet, at least 20 XRP need to be deposited in the wallet for that to happen.
Stellar Lumens vs Ripple
If you have a hard time seeing the difference between these two you’re not alone. Both are moving to accomplish the same goals and both share a big financial backer (Jed McCaleb). Steller is a fork of 2014 version of Ripple that claims to solve many of the issues that can be seen with the original.
They share the same root tech. Unless you look at the exact technical specifications the majority of differences can be found only in the way they plan to do business. Ripple is run by Big banking and made for Big banking. Steller is run by entrepreneurs to help companies and individuals with remittances.
It should be said that even though Steller was a fork of Ripple today it shares very little of the same code. After about a year into business Steller released a major overhaul of its code base with the name Stellar core.
If you want to take a deeper look at the differences I recommend this article on stack exchange.
The highlights are that Ripple is more centralized Steller is more open to outside development and help. In 2015 the centralization of Ripple was highlighted when funds of Founder Jed McCaleb were frozen after he left Ripple.
In the end, even though they hope to accomplish similar goals they are not really competitors as their target audience do not really overlap. With XRP focusing on being the behind the scenes tech for banks and money remitters to use, and Steller hopes to give those using MoneyGram and Western Union a new option. That combined with the obvious market cap and founding differences it is hard to say these two are actually competitors.
Should You Buy Ripple (XRP) as an Investment?
The easiest way to answer this question is by asking if Ripple Labs will be able to succeed in providing the go-to payment solution for the financial industry. If they do there will be a high demand for XRP and a high price can be justified. That being said Ripple has made some lofty goals.
Currently, it looks like they are succeeding, which explains why the value of ripple has increased so much in 2017. If RippleNet becomes a part of the financial industry for interbank payments, the value of the cryptocurrency will likely skyrocket in the coming years to reflect this development. This seems more and more likely as they keep adding big names to the list of relationships. However, should Ripple Labs fail at this endeavor? or even if the government starts preventing business the value of ripple will likely wither away.
Big fish are only now joining
Take into consideration when looking at investment options that more and more traditional institutional investors are entering. These groups will be buying digital assets in size. Due to the higher liquidity requirements that institutional investors need, it is very likely that most funds will purchase holdings in the largest. Only the most liquidity cryptocurrencies on the market, i.e., the top ten cryptocurrencies can support their demand. Therefore, Ripple will benefit from institutional investor money flowing into digital assets.
The coin supply issue.
The other risk for ripple’s price development is the ample supply of the coins that is yet to hit the market. The money coming into the ripple system has to outstrip the number of new coins entering. Should the demand for the digital currency not exceed the original supply entering the market, the money will lose value. Ripple’s future supply management plan is now well-known. Many believe this is already priced into the value of ripple.
Ripple is not a crowd favorite in the bitcoin community. Even still the cryptocurrency has the potential to become a favorite among investors and financial institutions alike. Regardless if it is a real cryptocurrency, it still has real value. For many, it presents a much-needed upgrade to an out of date system. Will 2018 be another big year for ripple?
Are you invested in ripple? Share in the comments below where you see the future of Ripple.