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The Ripple Cryptocurrency is an open payment system in beta. Its goal is to allow people to break free from financial institutions like banks, credit card companies, and other networks that enforce fees and foster delays. As per market size and capital, Ripple is as of September 2020, the fourth-largest cryptocurrency, sitting just behind Bitcoin, Ethereum and USD Tether. The Ripple network now has billions of dollars’ worth of cryptocurrency on account. It was built as a digital payments network for real-time financial transactions and is also the core owner of Ripple XRP, the digital coin that increased its value 40 times in 2017 alone.
To avoid confusion, the network is referred to as Ripple, and the Ripple coin as XPR – Ripples. The frequency of releasing new coins into the system influences the price and rate. In total, there are 100 billion XRPs in existence, and Ripple owns approximately 60 per cent of them. If you take all this valuation into account, it would be worth more than several US tech startups put together. XRP is majority owned and tied to a single company.
Ripple is constantly investing in its network and growing partnerships with global firms and financial institutions. Some of the banks that have signed on to use Ripple include BBVA, SEB, Start One Credit Union, and Cambridge Global Payments. As the market and network continue to grow, so does the potential of Ripple’s value.
Key Factors Affecting Ripple XRP Price
Like every other cryptocurrency, the price of Ripple (XRP) is determined by forces of demand and supply, as well as overall speculation activity. However, Ripple is not exactly like every other cryptocurrency, because it offers real utility, including fast global cash transfers, which consequently influences how market participants react to its demand and supply. Here are some of the key factors that impact the price of the XRP coin:
Unlike Bitcoin and other cryptocurrencies that are mined, the Ripple company pre-minted 100 billion XRP coins at launch. Over 45 billion XRP coins are in supply, with the remaining amount held by the Ripple company and designed to be supplied periodically by the executive. This means that investors and traders need to track the release and circulation of XRP coins on the Ripple Charts website.
The Ripple price is greatly impacted by the adoption of its platform by financial institutions. Ripple has always been touted as the cryptocurrency that offers the most practical utility. The network aims to enable the quick transfer of cash around the world, essentially a replacement of the traditionally popular SWIFT network. Ripple has already been adopted by major banks, such as Bank of America and Royal Bank of Canada, among others. The XRP coin usually encounters demand when news headlines of adoption by major financial institutions are released.
The Cryptocurrency Market
The overall sentiment in the cryptocurrency market, especially for Bitcoin, affects the Ripple price. This means that when overall cryptocurrency prices rise, the XRP price may also follow suit. But when the overall market takes a bearish tone, the Ripple price may also accelerate its tumble. In addition to the overall cryptocurrency sentiment, public perception of Ripple also influences the price of the XRP coin. This is what happened in 2017 when XRP prices appreciated as the public viewed it as a possible future replacement for Bitcoin as the top cryptocurrency with an actual practical use case.
Ripple was launched to provide fast and inexpensive transactions around the world. While it is the cryptocurrency that has received much media coverage with regards to that use case, Ripple faces tough competition in its bid to expand and deepen its adoption in the financial world. Its first major competitor is SWIFT itself (the company it sought to replace), which has upgraded its systems and protocol to protect its turf. Ripple also faces competition from other cryptocurrencies with similar use cases, notably Stellar Lumens, which has also gained traction in the market both in terms of adoption as well as positive media coverage. This represents a huge threat to the long-term appreciation in the price of XRP coin.
Getting listed on a major exchange is a huge deal for any cryptocurrency project. In some cases, it can be the difference between the success and failure of the cryptocurrency. Achieving a listing is a positive fundamental for any coin, whereas delisting can provide massive headwinds to the price of the underlying coin. XRP, for instance, faced tough times after a major exchange, Binance US, announced that it will delist the coin in January 2021. This came after the SEC (Securities and Exchange Commission) in the US filed a lawsuit against Ripple and two executives over claims that they raised over $1.3 billion through an unregistered, digital asset securities offering.
Based on the Ripple website, their concept is a ‘basic infrastructure technology’. The idea of Ripple was born in 2004 by Ryan Fugger from Vancouver, Canada. The currency was developed over the following ten years, until finally, in 2014, various large banks started using Ripple and the related payment networks. The Ripple system offers numerous advantages to banks, like distributed ledgers, pricing and security. The company behind Ripple is ‘OpenCoin’. There are two separate entities that make up Ripple:
- The payment network – Ripple
- The actual currency on the payment network – XRP Ripple
Building on the decentralised digital system, Ripple’s concept is to work with different payment systems worldwide. Ripple allows businesses to perform transactions within 3-5 seconds. The payments are processed and received automatically and are irreversible. Various financial institutions worldwide have established partnerships and started using the Ripple system.
In many ways, Bitcoin and Ripple are similar. Like Bitcoin, the Ripple coin has a limited number of units that can be mined. Both can be transferred from peer-to-peer, and both have digital security keys to prevent face transactions of coins. Payment information on the ledger is private, however, transaction information is public. The people behind Ripple insist that they provide faster transaction times than Bitcoin, because there is no waiting on block confirmation, and transactions transmit through their network very rapidly.
The Differences Between Bitcoin and Ripple?
- Both are open source – not owned by any one company or any individual
- Transactions for both can be anonymous and free over the internet
- Both Bitcoin and Ripple are decentralised currencies (no banks or approvals needed)
- Ripple is faster in processing transactions and more energy-efficient than Bitcoin
- Bitcoin is owned by a community; Ripple is owned by a private company and its internal ledger is a closed affair
- The total valuation of all bitcoins in circulation stands at approximately $270 billion, while Ripple is at $120 billion
Bitcoin wants to change WHAT we pay with; Ripple wants to change HOW we pay.
Ripple Trading FAQ
- Will the price of Ripple continue to go higher?
The Ripple cryptocurrency looked like 2020 was going to be a bust as it was up just 24% through the end of October, while competing cryptocurrencies sported gains of 100% or more over the same time frame. That all changed as Ripple rose nearly 300% in November 2020. Since then the gains have partially evaporated as they came primarily from a free airdrop of coins to holders of Ripple at that time. Which has traders wondering if Ripple can return to those November heights. What will really determine if the coin can go higher will be adoption by banks. While that is slowly happening, it hasn’t been nearly sufficient for Ripple to become widely used or in high demand just yet.
- Is Ripple a good cryptocurrency for trading?
In general most cryptocurrencies exhibit a high degree of volatility and are suitable for short-term trading. Ripple is no exception, but typically we don’t think it is the best cryptocurrency for trading. Still, there are times when it can be better than others, such as when it becomes overbought like in November 2020, or when it becomes oversold like in March 2020. In short, there are always going to be opportunities in trading cryptocurrencies like Ripple, but you need to keep your eye on the coin to know when those opportunities are arising.
- What’s the best strategy for trading Ripple?
Ripple traders can use many trading strategies and styles to profit from price changes in the coin, but no matter which strategy is used we believe they should all revolve around the use of CFDs rather than going to an exchange and actually buying the Ripple cryptocurrency. There are simply too many risks and confusing steps when you own the cryptocurrency and need to move it from wallet to wallet, or exchange it for fiat currency. Trading CFDs does away with all this and allows the trader to focus solely on the price action and on making a profit.