The cryptocurrency market has recently become crowded, with the leading coin – Bitcoin – having risen nearly 60% from its bottom of $3,147 in December 2018. Many altcoins have exhibited dramatic increases, including Ripple, which is currently the world’s third-largest cryptocurrency.
Ripple is considered a high-potential cryptocurrency, as it has many preeminent functions. So, what are the benefits of investing or trading the XRP? Read on to find out.
What is Ripple?
Built by a team of experienced blockchain developers, Ripple is a peer-to-peer open source payment system that connects banks with banks and other payment providers. It was first introduced in 2012 by OpenCoin, a company operating under the management of Jed McCaleb and Chris Larsen.
The most prominent feature of Ripple is the lightning-fast transaction settlements speed –transactions are processed within only 4 seconds. Thanks to this, the cryptocurrency is highly appreciated and currently used by high profile financial companies, including UniCredit, UBS, RBC, Santander, etc.
Like other payment networks, the Ripple network has its own internal currency: Ripple (XRP). Transactions here are not based on mining protocol, so the only way to own XRP is purchasing on crypto exchanges. Ripple’s total supply is 100 billion XRP.
Similarities and Differences Between Ripple and Bitcoin
- Transactions are irreversible
- Secured with cryptography
- Bitcoin is minable, while Ripple is not.
- Payment settlement speed of Ripple is much faster than Bitcoin’s
- The total supply of Ripple is 100 billion, while that of Bitcoin is just 21 million
- Ripple can process more than 1,500 transactions per second, while Bitcoin can only process 3 to 6 transactions during the same period.
Advantages of Ripple
- A Relatively Safe Investment Option
One of the factors making Ripple preferred is that it’s adopted by banks. In the eyes of investors, this is a safe signal to invest (although it doesn’t wipe out all the risk of investment).
Thanks to Ripple’s association with banks, there are more and more financial institutions wanting to embrace this cryptocurrency. This will probably make XRP more stable over time. In addition, when the volatility decreases, it will be less risky to trade the XRP.
- Cheap Price
At the time of writing, an XRP is worth $0.32, which is much cheaper than the price of a Bitcoin (about $5,000). This helps amateur investors be less confounded when converting their dollars to XRP.
Furthermore, during the periods when the whole crypto market moves up, investors tend to pay more attention to good altcoins with a cheap price like XRP. That may boost the value of this cryptocurrency.
Disadvantages of XRP
The XRP is an ideal coin for investors; however, for traders, it seems not. Stability may cause its price not to fluctuate much; therefore, short-term traders might not find good trading opportunities on this cryptocurrency’s price movement.
In general, Ripple is a high-potential crypto coin, as mentioned at the start. It is very suitable for medium and long-term investors.
There are two ways to invest in the XRP: purchasing on exchanges, or using CFDs (Contract For Differences) with a forex broker. The second way is advantageous because you will have more benefits such as leverage, ease of implementation, and low transaction costs. Additionally, you can make a profit even when the XRP’s price falls.