What Is XRP and is it safe to invest?
Cryptocurrency trading has become a new Meta in the past few years and is widely sought-after by people who have just started trading. Apart from newcomers, it is also acknowledged by some significant institutional traders and is even popular in the Wall Street division.
What is Crypto Trading?
Crypto trading is forecasting the price movements of digital currencies and then, without taking ownership of the coins investing in the ones that you think will make you profit. However, when investing in digital currencies could be profitable for traders, it could also be risky, but this risk can be reduced by doing some research. Several major digital currencies are prospering every day, like Bitcoin, Ethereum, and BNB. Most people focus on these currencies, but some people want to broaden their horizons and look for a bigger alternative like XRP as well.
What is XRP?
It is a digital token that is developed by a US-based organization Ripple Inc. This coin is very different compared to other coins like Bitcoin and Etherum. The difference is there because Ripple does not relate to the blockchain network, whose primary assets are based around cryptocurrency assets.
Ripple is a payment method that banks and sizable organizations use for cross-border payments. More than 100 companies all over the world have chosen the Ripple software that promises fast and smooth transactions. Unlike Bitcoins, which still have not been mined to their maximum limit, all the 100 billion Ripple coins were pre-mined when they started being sold in 2012. It’s up to Ripple Labs whether they want to distribute more XRP coins in the market according to the need to control the money supply. There are more than $38 billion XRP coins circulating in the market, which makes them one of the most prosperous digital currencies in the market.
History of XRP
The founders of Ripple Labs were Chris Larsen and Jed McCaleb. Their idea behind developing it was that it could act as a ‘middle man’ kind of currency that can be used for both the cryptocurrencies and the actual currencies that are also called Fiat.
How Does It Work?
To understand more about it, we need to understand how it works. What makes this cryptocurrency different from other currencies is that while most of the currencies are based around localization, XRP is completely owned by Ripple. The company is taking it in a new direction as they believe that cryptocurrencies should be used to serve banks instead of replacing banks like other cryptocurrencies.
To understand this better, let’s take an example, banks and other financial institutions take a lot of time to transfer money to other banks and institutions. This is because most banks are using systems that were built more than 30 years ago. Systems like Western Union and MoneyGram are not only slow but also expensive when used to transfer money. To transfer money from one bank to another, they usually have to send payments through multiple intermediary banks, which causes them to be slow and costly because each bank takes time to process the money and a fee for it.
This is where XRP comes in. It is issued by Ripple Labs so that if a bank wants to transfer money, instead of transferring it through different intermediary banks, the bank can convert the money into XRP and send it to other banks.
Why Banks Prefer XRP Over Other Cryptocurrencies?
This is because XRP transactions are faster compared to other well-known cryptocurrencies like Bitcoin and Etherum. This transaction takes about 4 seconds, whereas Bitcoin transactions can take up to 10 minutes. Another reason is that it can handle up to 1500 transactions per second, whereas a coin like Etherum can handle about 30 transactions per second.
Is It Safe To Invest In XRP?
There are many factors that come into play when thinking about investing in a cryptocurrency, but one thing remains constant and is the element of risk. Apart from the fact that no cryptocurrency is 100% safe, it still has a lot of potential, and this can be proved by the following details.
· The first and most important thing is that Ripple is an official company that is affiliated with many international banks and not some Blockchain startup from a random organization. Another point to note is that unlike Bitcoin, whose limit is 21 million, Ripple has a limit of $100 billion tokens that are already pre-mined. This means that it has the possibility of piquing the trader’s interest when Bitcoins run out.
· Another reason why it is safe to invest in it because if XRP fulfills its purpose of why it was developed, which is that almost all banks will use it as a medium of transactions. If this happens, it will be very profitable for people who invested in it for future trading.
· When thinking about whether it is safe to invest in a digital currency, one should look at the currency’s history. When XRP was launched, the trading closed at $0.005. Fast forward to 2017, during the rise of Bitcoins and other altcoins like XRP, the price went up to 84% a day. What’s more, by the end of 2017, it ended at $2.30, which is a growth of about 38,000%. Even so, it did come back to the $1 mark the next year but still, it is way more than its initial trading price.
Final Words
People who want to invest in it for short-term trading have a benefit as it has been found in the past few years that XRP prices stay low, and then suddenly they go up, which is exactly what happened in 2017. As of now, the current value is $0.51. It is expected to soar up and head to $3.5. The stats seem to be pretty convincing, and investing in it might not be detrimental for you.
I would still advise you to consider your options and start small so that you don’t face any major risks if things go south.
Authors Note: Personally, I am considering a $10,000 position in XRP towards the end of February into Mid-March.
For another cryptocurrency altcoin that I believe has real potential, check out this article about The Graph.
https://medium.com/datadriveninvestor/now-is-the-time-invest-in-the-graph-grt-before-it-is-too-late-the-hot-altcoin-for-q1-q2-of-be8fcff6c423
To read about Dogecoin, a cryptocurrency altcoin that I believe is a huge joke and risky investment, check out this article, Dogecoin: Crypto With A Bite Or Elon Musk’s Pet?
https://medium.com/datadriveninvestor/dogecoin-crypto-with-a-bite-or-elon-musks-pet-f82699fb7c35
*Authors Disclaimer: This information is the opinion of the author. There is no guarantee that this investment is safe or will make you any money. Please consult a financial advisor or accountant if you are unsure of what steps you should take before investing.
Shayn Satten
Financial Guru
