What Is XRP? Is It a Good Investment?

Of all the cryptocurrencies currently out there, none is more exciting than XRP. While some crypto-purists hate it, others clearly see that this is a cryptocurrency with massive potential for growth.

In this piece, we’re going to answer the fundamental questions:

  • What is XRP?
  • What does XRP do?
  • What’s the difference between XRP and Ripple?
  • Is XRP a good investment?
  • Is Ripple a good investment?
  • How can I buy XRP?

We’ll answer these questions and many more before we’re done here today. To fully understand XRP’s potential, you first need to understand what it is.

What Is XRP?

XRP is a cryptocurrency much like Bitcoin, Litecoin, or Ethereum. Its roots stretch way back to 2004, long before Satoshi Nakamoto released the Bitcoin Whitepaper, although most cryptocurrency investors and enthusiasts would be shocked if you told them that.

To understand XRP, you need to know a little bit about its history and Ripple history. Ripplepay.com was launched in 2005 by Ryan Fugger, a Canadian decentralized systems developer, who had the vision of creating a network that would allow users to extend lines of credit to friends, family, and others using traditional and online currencies. By 2011, Ripplepay had caught the attention of Jed McCaleb, Arthur Britto, and David Schwartz. Chris Larsen joined the party in 2012.

This group held discussion with Fugger, who agreed to hand control of it over to them. Later that year, they also founded OpenCoin Inc. OpenCoin development started right away, and the aim was to facilitate near-instant transfers between two parties.

XRP itself was created in 2012 and had/has a maximum supply of 100 billion. The founders held 20 billion back for themselves and gave the rest to OpenCoin. Most of this now sits in a secure escrow, where it will be released gradually into the market. This was done to address concerns that it could be dumped during a price increase.

So, in a nutshell, XRP is a cryptocurrency which was developed with a purpose in mind – fast, cheap global payment on the XRP Ledger. While it may come to have other uses, this will always be its primary one and will be what Ripple and XRP are most associated with.

What is Ripple?

The difference between Ripple and XRP is the cause of a lot of confusion, and we’re glad to have an opportunity to clear it up here.

To put it simply, XRP is a cryptocurrency which runs on the XRP Ledger. It’s open-source and anyone, anywhere in the world is free to use XRP and develop of the XRP Ledger independent of Ripple.

Ripple, on the other hand, is a specific company which was formed by the individuals we talked about above to develop on and use the XRP Ledger. It’s a software company which builds payment solutions, but it does have custody of huge amounts of XRP, which is why so many people erroneously call XRP Ripple. So, Ripple is a software company, and XRP is a cryptocurrency which they use and own vast quantities of.

Is XRP a Good Investment?

There are no guarantees in the cryptocurrency space, and this is still a highly speculative asset which could go to zero. However, despite this, many investors are excited about the future of XRP and believe its price will increase by multiples over the long-term.

To understand why this could happen you have to understand what might create demand for XRP. After all, the law of supply and demand is the only real thing which determines the price of a cryptocurrency.

While Ripple does develop products which don’t create demand for XRP directly, such as it’s X-current payment solution, there are other promising software solutions which do. The two main candidates are X-Rapid and Coil. Let’s take a closer look at both of those now.

What is X-Rapid?

X-Rapid is a global payment system which uses XRP as a bridge currency between two currencies or assets. Imagine a bank wants to move $100 million from USD to Kenyan Shillings to settle a debt. Using the current banking system, it would take days to complete this transfer, the payment would have to hop through multiple correspondent banks, and this would lead to extra fees and potential losses due to currency volatility along the way.

X-Rapid eliminates both problems by offering settlements in four seconds anywhere in the world. Using the same example as above, the transaction would look like this:

USD-XRP —> XRP-KES

The minimum fee for using the XRP Ledger, which X-Rapid runs on, is 0.00001 XRP. Since XRP is trading at just $0.29 at the time of writing, that means using X-Rapid will lead to substantial cost savings for companies involved in international money transfers.

X-Rapid is a not an idea or something which will be released in the future. It’s live, and there are several high-profile companies either using or testing it now. As you can see, X-Rapid has serious potential, and if major banks and/or remittance companies continue to adopt it, it could drive the demand for, and hence the price of XRP up substantially.

What is Coil?

Coil is an entirely different company from Ripple, but it was founded by a former Ripple executive, Stefan Thomas.

Coil’s agenda is to expand the use cases for XRP. While it’s now primarily seen as a bridge currency and settlement vehicle, Coil aims to enable the largest internet companies to accept it as a form of payment, transforming XRP into a currency which could be used in day to day life.

One of Coil’s major focuses so far has been in the area of micropayments. To understand this better, think of the following example:

You regularly read news online, and are frustrated by the fact that many of the best articles are now hidden behind paywalls. You don’t want to pay subscription fees to all of these different newspapers, so you simply don’t read the articles.

If Coil succeeds, you could load your account with a certain amount of XRP and could pay each newspaper a few cents to read the article, rather than a subscription fee. This is clearly a win-win situation, and is a prime example of how micropayments could change the way content is consumed online and create demand for XRP.

As of now, because of the high fees associated with traditional payment systems, this form of payment is impossible.

So, Is XRP a Good Investment?

We’re not financial advisors, so we aren’t going to answer that question directly. What we will say is that Ripple certainly has a strong incentive to see the price of XRP rise and that since the above-mentioned products are currently live, rather than in a conceptual stage, XRP is miles ahead of many other cryptocurrencies when it comes to use case.

Again, supply and demand is the biggest factor in determining the price of a cryptocurrency. If these products succeed (and they’re not the only use cases for XRP), it has the potential to skyrocket in value.

It should also be noted that ripple is not the only company developing on the XRP Ledger. Banking conglomerate R3 recently announced their Corda Settler app would accept XRP.

Clearly, some very large institutions are taking note of XRP. It remains to be seen if they actually use it.

XRP Price Prediction

Giving an accurate Ripple price prediction (the crypo is actually called XRP, to be accurate) really depends on your timeframe and point of view.

In our opinion, with increased use and favourable regulations, XRP could hit $20 or more. That’s conservative by some estimates, but anything above that seems unforeseeable at this moment in time. As XRP use cases increase and problems it can solve are identified, there’s the potential for it to go much higher.

How to Buy XRP

There are now many different cryptocurrency exchanges which list XRP. We’d recommend using Binance if you want to trade it for different cryptocurrencies such as Bitcoin. If you want to buy XRP for USD, EUR, GBP, or other fiat currencies, we’d recommend Kraken. Do your own research before picking an exchange.

Ripple/XRP Frequently Asked Questions

Q. Is XRP a security?

There’s no way for anyone other than the SEC to decide that. However, given that it passes the Howey Test and that XRP would continue to exist even if Ripple ceased trading, we would say it’s highly unlikely that XRP will be deemed a security.

Q. Where can I get accurate Ripple news?

There’s so much nonsense, inaccurate information and clickbait floating around online. We would suggest following Ripple on social media and regularly visiting the Ripple website for accurate news and announcements.

If you’re looking for a good XRP forum to learn more and engage with other investors, we’d recommend XRP Chat.

Q. Can I invest in Ripple?

Unfortunately not. While we’d love to invest in Ripple unless it has an IPO that won’t be possible. The best way to try to get a piece of the action this company will inevitably be a part of is to invest in XRP.