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Despite the ongoing turmoil in the cryptocurrency space, investors have made money by hand for the past 20 months. For example, several cryptocurrencies, including Solana, Terra, and Polygon gained significant momentum in 2021. Each of these digital assets has grown over 10,000% this year.
Relatively, Ripple has increased by a “measly” 300% since the beginning of the year. At the time of writing, Ripple is the sixth largest cryptocurrency in the world with a market cap of $ 45 billion. Its digital token called XRP has grown nearly 15,000% over the past five years. But it’s also 70% below the all-time high, which allows investors to buy the dip.
The bull case for Ripple
According to the Ripple team, the global payments infrastructure system is far from ideal and does not meet current business or consumer needs. Ripple, like any other cryptocurrency participant, aims to take advantage of the blockchain network to improve the speed, cost, and reliability of transactions.
Ripple claims to be the only business blockchain company whose products are used commercially by customers in over 55 countries. Its customer base has access to alternative liquidity solutions through the global Ripple network and uses the XRP ledger to improve payment services around the world.
Ripple has partnered with customers to optimize their underlying infrastructure while working with financial regulators and governments to ensure their solutions are compliant and secure.
The RippleNet solution, a currency exchange and cross-border transaction platform, connects multiple financial institutions via a single API, which speeds up payment processes at a lower cost. Companies can improve customer retention rates by offering their customers a robust payment experience via RippleNet.
In short, the RippleNet platform can replace SWIFT (Society for Worldwide Interbank Financial Telecommunications), which is currently dominating cross-border transactions. While transactions carried out on the SWIFT network can take more than a day to complete, money transfers on RippleNet are carried out almost instantly.
Over 11,000 institutions in 200 countries have partnered with SWIFT, while RippleNet has 300 financial institutions on board at the time of writing.
The Risks Associated With Ripple
Two years ago, Ripple acquired a 30% stake in MoneyGram, one of the world’s leading money transfer companies. Ripple sought to partner with MoneyGram for cross-border payments and processing forex transactions through the use of digital assets. However, the two-year partnership ended earlier than expected in March 2021.
Last December, the Securities and Exchange Commission accused Ripple of raising $ 1.3 billion through an unregistered securities offering by issuing the XRP token. MoneyGram also confirmed that it stopped transactions on the Ripple blockchain after the lawsuit became known.
In addition, SWIFT also launched its Go service in August 2021, which enables participants to send money within a few seconds, thereby undoing Ripple’s competitive advantage.
The foolish takeaway food
There are several characteristics associated with the XRP ledger:
- Speed: The transaction times are only three seconds.
- Low Cost: The cost is around $ 0.0002 / transaction.
- Scalable: 1,500 transactions per second.
- Sustainable: The blockchain network consumes compared to. negligible energy Bitcoin and ether.
However, the regulatory problems surrounding Ripple can hardly be ignored, at least in the short term. Similar to other cryptocurrencies, investing in the XRP token carries significant risks and it makes sense to allocate only a small part of your savings to this asset class.
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