Cryptocurrency enthusiasts certainly know about Ripple XRP cryptocurrency. Ripple has been in the news lately and became one of the most talked about cryptocurrencies, mostly because of its battle against the SEC (U.S. Securities and Exchange Commission). Keeping the rumours aside, let’s talk about the project in detail and its future potential.
What is Ripple?
Debuted in the year 2012, Ripple was created by Ripple Labs Inc. to become an efficient money transfer network that can solve the pain of transaction delays across borders. The project is entirely built on blockchain and promises faster transfer with the lowest transaction fees.
The idea is to facilitate cross-border transactions without waiting for third party approval. At the moment, international money transfer is facilitated by SWIFT [ A money transfer network] that takes around 4 to 5 days to transfer the amount via third party i.e banks. Ripple wants to do the same at an individual level.
Ripple’s primary aim is to serve the financial industry.
What is XRP?
XRP is the currency of the Ripple network. Just like ETH is the currency of Ethereum network, XRP is used by the system as a currency that facilitates money transfer using Ripple’s blockchain network.
The use of XRP doesn’t stop there, it can be used as a store of value, a coin that can be used to exchange cryptocurrencies or a loan that can be used to finance transactions on the Ripple network. The possibility can go beyond anyone’s imagination.
Check out the Ripple web story
Is Ripple (XRP) a centralized cryptocurrency?
The crypto community has a love and hate relationship with Ripple (XRP). Some love its use case but others call it a coin for the banking system. The point is, cryptocurrencies are created to be independent of banks but here we have a coin built on blockchain to serve the banks that make it centralized. But is that really the case?
To answer this question, we have to study what makes a cryptocurrency decentralized and centralized. Let’s compare it with Bitcoin. In my post on what is Bitcoin, I stated how the system is decentralized. Every transaction on the Bitcoin network needs approval from the majority of validators in the network, there’s no single authority that has the power to validate the transaction. Hence makes the system decentralized.
In XRP’s Ripple network there’s a default list of 35 trusted validators that have the power to validate the transaction on its network, making it somewhat centralized. But that’s not entirely the case.
Ripple network allows the users to opt-out of its default list of validators and create their own list of validators on the network. This allows the network to continue to validate transactions without the involvement of the default list of validators. Hence making it decentralized within the network.
Ripple is both, a centralized and decentralized network
When it comes to financial settlements, Ripple is the fastest transaction network among its peers like SWIFT. It has the ability to perform 1500 transactions per second and takes four to five seconds to confirm the transaction. You can convert FIAT into Ripple and transfer across borders for faster settlements at the lowest fees.
Lowest Transaction Fees:
It requires as low as 0.0001 XRP in transaction fee. This is lower than any other blockchain network.
XRP can be traded on the top crypto exchanges like Binance. It can be used as a medium of exchange to purchase other cryptocurrencies in circulation.
High Adoption Rate:
Ripple has successfully made a name in the global payment space which has led to a high adoption rate, especially among large corporations. Top banks like Axis and Yes bank are the early adopters of the Ripple network.
Not Completely Decentralized:
As explained above, Ripple is a partially decentralized network that makes it an unattractive investment. Investors are more interested in a complete blockchain solution that can give them freedom from third party control.
Risk of Devaluation:
XRP has a very high risk of devaluation in the future. Since the majority of supply is controlled by Ripple Labs Inc. Releasing a high volume of XRP tokens in one go will result in currency devaluation and a drop in prices.
The total supply of XRP is 100 billion
SEC Lawsuit against Ripple:
In 2020 Ripple was challenged by the SEC of calling itself a cryptocurrency than security. This move has resulted in Ripple being removed from the majority of exchanges. Hence, diluted its demand in the market. Helium Crypto is another project that can become the next target of SEC.
Case Update: On November 01, 2022, Coinbase applied for regulatory approval to back Ripple against SEC. It argued that most digital assets listed on the exchange do not pay returns to investors like most shares in public companies and XRP also fall in the same category of digital assets.
Bitcoin vs Ripple:
Bitcoin (BTC) and Ripple (XRP) are the two famous cryptocurrencies in the crypto world. Built on a blockchain system, both are serving different purposes in their capacity. Here’re the key differences between the two –
Bitcoin is a digital currency that was created specifically to replace the national currencies. The primary purpose of Bitcoin is to establish a decentralized financial system, independent of large corporations i.e banks.
Ripple on the other hand is called the currency of the banks. It’s a money transfer network that facilitates smoother and faster payment transfer across borders. Therefore, helping banks in faster settlements.
Type of Network:
Bitcoin is a 100% decentralized network, there’s no single entity that can control the network. Ripple is a semi-decentralized network. Although you can pass the default list of validators and create your own list of validators on the network, for a layman to transact on the network there’re 35 approved validators that confirm the transactions, making it partially centralized.
Bitcoin supports 4.6 transactions per second while Ripple has the capacity to support 1500 transactions per second, making it rub shoulders with Visa that supports 1700 transactions per. second.
Cryptocurrency Mining is defined as a reward given by the network for solving a complex mathematical problem on the network which leads to the addition of a new block in the blockchain.
Bitcoin (BTC) can be mined by using powerful computer rigs. Ripple (XRP) on the other hand is pre-mined and the circulation is controlled by Ripple Labs Inc.
Stellar Lumens (XLM) is the closest competitor of Ripple (XRP).
Ripple XRP Price:
Please check the latest Ripple price, shared below –
Ripple Price Prediction:
Ripple has seen its highs and lows. Ripple (XRP) attained an all-time high of $3.34 in Jan 2018 and hit an all-time low of $0.11 in March 2020. The ongoing SEC case against Ripple Labs Inc. has deteriorated its presence in the global crypto exchanges that led to delistings of XRP on the platforms.
However, if Ripple came out clean and move the case in its favor, the chances are high that XRP will hit a mark between ($5 -$10) in the next bull run. The project has a very strong use case, although the lawsuit has given Ripple much-needed media footage for growth. Something I call a blessing in disguise that can turn into its favour in the long run. It’s a wait-and-watch game.
How to buy Ripple in India?
If you wish to diversify your investment portfolio by investing in Ripple, I strongly suggest creating an account on WazirX. It’s the subsidiary of Binance and the biggest cryptocurrency exchange in India.
You will need to create an account on the platform and submit KYC documents along with bank details. Once approved, you’re all set to purchase Ripple on the platform. For details, please read my post on how to buy Bitcoin in India.
Should you invest in Ripple?
Ripple (XRP) is one of the few cryptocurrencies with a crystal clear use case. An increase in its global adoption will trigger a rise in price levels. However, SEC and its questionable supply are the two bottlenecks that are holding the coin from exploding.
Once the SEC dust settles down, trust in the parent i.e Ripple Labs Inc. will surge, which may result in an increased adoption rate and price surge, a snowball effect. Until then, it can still be counted as a secure investment but one shouldn’t expect it to hit the growth levels of Bitcoin or Ethereum.
That’s about Ripple XRP cryptocurrency. Stellar Lumens (XLM) is one of it’s competitors serving the similar purpose. Given the use case, both can co-exist and grow simultaneously. In my next post, I will talk about Polygon MATIC and how is it competing with the Ethereum blockchain. If you like the post, please share it in your social handles and checkout related posts shared below.
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
Paras is a blockchain writer & video creator at Katoch Tubes. In his free time, he loves watching space exploration documentaries & Hollywood movies.