Ripple (XRP) is currently the third largest market capitalization cryptocurrency, behind Ethereum (ETH) and Bitcoin (BTC). Ripple is based on a small free software that uses the end-to-end paradigm. Each local Ripple node is a trading system in itself; so, everything is a decentralized mutual bank.
Ripple’s goal in the distribution of XRP coins is to encourage actions generating trust, utility and liquidity with the vision ito solve a liquidity problem for the banks. The XRP is actually one of the most effective ways to make financial transactions available in our world today. In fact, Ripple is today better known as a resource for payments and transactions than for its cryptocurrency. But, it is currently blooming big thereby allowing you to trade between USD, Litecoin and Bitcoins. It is a bridge that brings together all types of fiat and cryptocurrency and makes them available. In short, Ripple is not just an alternative currency, it is a social service that allows people to trust each other in the real world.
The only assumption that unskilled investors can have is the fact that they believe that, simply because it is a superior motto, with a team set up from behind, the XRP is an absolute buy. Market capitalization and rank alone do not tell the whole story. Before making large investments, it is necessary to have a better vision of the currency in terms of project, use cases and potential outlook. From there, we get the pros and cons of investing in this cryptocurrency.
- Transaction Speed: XRP transactions are not only faster compared to traditional payment methods, but also compared to other cryptocurrencies. Fast Settlement in blockchain technology can process 1,000 transactions settled per second (and know how long it will take blockchain). Transactions faster than other currencies. But recall Bitcoin also had fast transactions when it started. So, time will tell if this is will still be true for XRP.
- Partnership: Ripple partnerships, the majority of which are to financial institutions. The number of banks and other financial institutions associated with Ripple continues to grow every other day. The company’s team oversaw a major marketing campaign to increase interest in the currency. These mega associations can only be excellent for the final value of the currency once the adoption is made. This creates a sense of trust and greater confidence in XRP, as the current cryptocurrency market has been affected by fluctuations, scams and theft, to name a few.
- Stability: The stability of technology and the absence of disruption make the currency attractive for institutions and businesses to start using. Due to the projected stability, the XRP will eventually be used more as a means of transaction, large companies like Amazon are planning to use the XRP as a means of purchase.
- Transaction Costs: The cost of a standard transaction in the Ripple protocol is approximately 0.00001XRP, which makes it virtually free for practical reasons, especially considering the generally high cost of international payments. Since there is no XRP coin mining, the XRP used to pay charges is destroyed.
- Centralization: Centralization is an aspect that has been repeatedly criticized in the case of the Ripple token. The amount of XRP that a company owns gives it a negative reputation. Many people in the crypto-space reject Ripple as a “pre-mined scam” just for the number of coin Ripple has. This naturally worried XRP investors and Ripple’s response was to save 55 billion coins on deposit.
As with any centralized system, investors must now rely on Ripple to keep their word.
- Competition: The biggest threat is competition, the development of more innovative payment systems that would be similar, or even better, more technologically sophisticated, offering an even more attractive alternative using a different coin as a relay currency, so that which is transferred via Ripple will dramatically decrease, or even completely eliminate the use of XRP.
- XRP Adoption is not equivalent to price increase: Ripple works with 100 times more banks. The value of XRP is pulled up by people who have it and think it will have more worth for their future. In fact, it discourage maintaining the XRP since they take risks because of the natural volatility of XRP. With banks, the actual users of XRP, who do not hold their currencies, the market capitalization of XRP will decrease.
These are elements that investors should consider when considering Ripple as an investment. There is no doubt that this technology is valuable, but given the limited number of banks using the XRP, investors should think about the tools provided by the company and if they are worth it. Nevertheless, we like the rather plausible idea that XRP’s maximum supply will one day lead to most financial transactions, a powerful incentive in buying XRP coins.
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