If you are considering buying XRP, here is what you need to know about it.
XRP is currently one of the 10 largest cryptocurrencies. If the name means nothing to you, you may be more familiar with its developer, Ripple. Although the cryptocurrency is called XRP, some people use “XRP” and “Ripple” interchangeably.
With a strong use case and leading financial partnerships, XRP has plenty of room to grow. But there are also obstacles that could hold it back. Before making your next investment in crypto-currencies, there are several things you should know about it.
1. It is a cryptocurrency designed for financial institutions.
When investing in cryptocurrency, one of the most important things to look at is the purpose of a coin. See the article: 3 cryptocurrencies likely to record future gains under scrutiny: Ethereum (ETH), Solana (SOL) and Mithril Finance (BARS).. Many of them fall short in this area because they don’t have a defined purpose or do anything different from dozens of other pieces.
XRP is unique in that it is aimed at financial institutions and payment services, unlike other consumer-oriented cryptocurrencies. Using XRP, banks and others societys can transfer money without needing to pre-fund accounts in other countries or pay expensive exchange fees.
2. Its goal is to improve international money transfers
Ripple has positioned itself as a competitor to SWIFT, the system most financial institutions use for international money transfers. Read also: Don’t miss 10x returns with Cardano (ADA), Vechain (VET) & Mushe (XMU). It offers a global payments network called RippleNet to facilitate cross-border transactions.
Financial institutions that use RippleNet have the option of using XRP for their money transfers. However, most Ripple partners avoid using XRP due to its volatility.
3. Transactions are fast and cheap
The two biggest advantages of XRP are the speed and low cost of each transaction. A standard transaction on Ripple costs 0.00001 XRP. This may interest you: Are Institutional Investors Dumping Bitcoin Amid Cryptocurrency Market Crash?. This is a small fraction of a penny to the current price of XRP, which is less than $1.
The average duration of a transaction is five seconds. Overall, XRP is a very efficient way to transfer money.
4. It has partnerships with over 300 financial companies
Hundreds of financial companies in over 40 countries have signed up to use Ripple. Here are some examples:
- American Express
- Bank of America
- Banco Santander
However, it still has a long way to go to catch up with its main competitor. To put things into perspective, SWIFT has over 11,000 partners, compared to over 300 for Ripple. But SWIFT has also been around since the 1970s. Ripple was launched in 2012, so its results so far are encouraging.
5. The SEC filed a lawsuit against Ripple.
Ripple found itself embroiled in a lawsuit with the SEC. The lawsuit, which was filed in December 2020, accuses Ripple of selling $1.3 billion worth of unregistered securities.
The unregistered security in question is the XRP cryptocurrency. Ripple defended itself by stating that XRP is not a security.
This court case is ongoing. While this is a reason to be cautious about XRP, it could also be a reason to invest if you think the deal will go Ripple’s way. A favorable outcome for Ripple could lead to a rise in the price of XRP. Additionally, Ripple plans to enter into stock Exchange through an IPO when the deal closes, which could also potentially boost the price of XRP.
6. It is trading well below its all-time high from 2018.
Quite a few cryptocurrencies smashed their previous highs in 2021, but XRP is an exception. Its high point was in January 2018, when it briefly reached a price of $3.84.
XRP has followed the ups and downs of the rest of the cryptocurrency market to some extent, and its price reached $1.96 in April this year. It has since dropped to around $0.84 at the time of writing. XRP’s weaker gains compared to other coins are likely a consequence of the SEC lawsuit.