The first cryptocurrency, and today one of the most talked-about topics across the globe, Bitcoin, appeared in 2009, revolutionizing the way people think about money and investing. So, since then, more than 10.000 cryptocurrencies were created. Some of them are insignificant but some are very valuable and popular amongst traders, as well as everyday people interested in investing. XRP, also called Ripple, is currently one of the top 10 cryptocurrencies available on the market, and there are predictions that in the following years it will continue growing.
However, investing in cryptocurrencies always comes with a risk, since they are highly volatile. This is why it’s important to spend time learning about the cryptocurrency you want to invest in. And if you want to make XRP your next investment, here are there things you should know about the project before buying.
1. Where You Can Buy XRP?
XRP can be used as an investment, even though it wasn’t originally developed as a currency. You can obtain it as a long-term investment, which means you would buy it and wait for its value to increase, or as a short-term investment, which means you would buy it and sell it quickly to take advantage of small changes.
Another thing to know, if you want to work with this cryptocurrency is that, unlike other coins, XRP can’t be mined because all of them already exist. Their ledger created 100 billion tokens, most of which (80 billion) belonged to the company Ripple. So, instead, you have to buy XRP at a crypto exchange that supports it.
However, you should know that not all exchanges list XRP and that only a few of them can operate in the United States. This is because they have an ongoing court case with the Securities and Exchange Commission (SEC).
2. What Is XRP and How Does It Work?
XRP is a crypto coin designed to allow fast transactions. It has become very popular in a short time probably because it has a unique approach and purpose. Instead of avoiding banks and other financial institutions, it collaborates with them to make international money transfers easier and cheaper. This way the technology company behind it, Ripple, and the coin itself, connect the existing financial systems with the world of cryptocurrencies.
Ripple has developed a payment protocol, called RippleNet, which has turned into a competitor for the SWIFT system—the most widely used payment system for fast cross-border money transfers. Simply put, their objective is to allow banks and financial institutions to improve their international transaction systems by using blockchain technology. It shortens the time needed for the transfer and reduces the fees. The cryptocurrency XRP can be used to exchange fiat currencies, other cryptocurrencies, or commodities.
Similar to other cryptocurrencies, the history of each coin is monitored and protected by a record called the XRP ledger (formerly known as Ripple Consensus Ledger), kept by a peer-to-peer network of independent computers, or nodes, around the world. Since there isn’t one central place where the ledger is kept, this is a decentralized system, which, along with other benefits, allows more transparency.
When more than 80% of validators agree with a transaction, a consensus is reached and the transaction is added to the ledger within three to five seconds. This makes their blockchain technology different than those used by other cryptocurrencies.
3. Who Uses XRP and Who Has Partnered With Ripple?
As we mentioned before, Ripple offers an attractive international money transfer solution, allowing financial institutions to use blockchain technology. Currently, more than 300 financial institutions in more than 55 countries around the world have partnered with Ripple, and use XRP for a faster and cheaper cross-border money transfer, including American Express, Santander, Bank of America, Bank of India, the Canadian Imperial Bank of Commerce, the National Bank of Australia, and so on.
In a Nutshell
Some of the traits that make XRP different than other cryptocurrencies, and as a result likely a good investment:
- It can be used for efficient fast and inexpensive payment;
- Transactions are processed and validated within three to five seconds;
- It has high scalability because it can process 1,500 transactions per second;
- It can be exchanged for fiat currencies, any cryptocurrency, and other commodities;
- It can’t be mined;
- It is related to the Ripple payment protocol, and as more and more banks use it, its value will increase.
When you are investing in cryptocurrencies there is never a guarantee that you will make a profit. The same is true for XRP. Like other cryptocurrencies, it’s volatile and you should invest in it cautiously. However, because it’s so unique, and because it has good predictions, it can be a great investment opportunity.
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