Ripple XRP soared more than 50% at one point yesterday, climbing up the ranks to become the second largest cryptocurrency. Its price has climbed a remarkable 29,000% this year. With 2017 being the year of Bitcoin, I want to give my take on this high-flying crypto.
First thing's firt: Ripple itself is not a currency. Ripple, in its entirety, is a blockchain, called RippleNet, intended to speed up the transactions and cash settlements between banks and other financial institutions. Ripple XRP is the "token". This token is the currency that banks and financial institutions use on the RippleNet when conducting transactions. Yahoo Finance gave a tremendous analogy: "XRP is to Ripple what ether is to Ethereum".
Having said that, Bitcoin clearly differs from Ripple in this sense: Bitcoin has the intentions of being a real currency that the public can use, while XRP is just a way for banks and financial institutions to conduct business on RippleNet and is simply a pure investment to the public.
Ripple, in all phases, is becoming more centralized
As mentioned, RippleNet and, consequently, Ripple XRP (which I will call XRP from now on, for simplistic purposes) are designed to help centralized entities like banks and other financial institutions (i.e. American Express).
Bitcoin grew in large part due to their decentralization. It is the first ever blockchain, a technology which cannot be tracked and whose users must be accountable for their own transactions.
Ripple is and will continue to be designed for banks, which is the complete opposite (and in my view, misplaced) intent from that of Bitcoin.
From an investment perspective, however, XRP is my preferred choice going into 2018 and beyond. I still advise you to buy whatever amount of Bitcoin you can now (especially since it is in a slump), but for me, XRP is the the more appealing option now. Why?
XRP is only in the low $2's. This price, combined with the fact that it is a cryptocurrency in a sophisticated blockchain (whose name alone has catapulted dying stocks such as LTEA or FTFT), offers more potential reward than potential risk.
Also, as mentioned, XRP has the second largest crypto market cap. This volume of XRP indicates that people are becoming more and more aware of the cryptocurrency. A surge in popularity also played a pivotal role in Bitcoin's recent rise. I believe the same will happen for XRP, an even cheaper crypto.
I hypothesized Bitcoin's explosive growth rate times its surge in popularity would catapult its price. I believe the same formula applies for XRP.
Put simply, XRP-AS AN INVESTMENT-is just like Bitcoin, but it is more appealing in the sense that it is a lot cheaper, growing at a faster rate, and is gaining more and more recognition from investors around the world.
However, there is cause for concern for Ripple investors or potential investors. Bitcoin rose at unprecedented rates primarily through its decentralized appeal. The government as well as corporate regulations XRP may be subject to may hinder potential growth rates for the crytpo. Still, I believe Ripple is the best crypto option given its price and still exponential potential growth rates.