Before the advent of digital currencies, man has been using paper or fiat currencies which are controlled by governments or central banks, restricted by location or country and can easily be destroyed. The launching of Bitcoin in 2009 by Satoshi Nakamoto made all the difference as the first ever cryptocurrency was created. Other cryptocurrencies followed and today, we have thousands of crypto coins existing. Investing in Ripple and other cryptocurrencies is increasingly becoming popular as cryptocurrencies are fully compliant with the modern globalization and digitalization of our world.
Ripple is a cryptocurrency, payment system, currency exchange and transfer system that was launched in 2012 by Ripple Labs Inc; an American fintech company. Its technology is based on a decentralized peer-to-peer network that is used to transfer multiple currencies. The network transactions are validated by independent servers that are owned by the public; anyone can own a node in the network. The Ripple Protocol consensus algorithm (RPCA) is applied every few seconds by all nodes, in order to maintain the correctness and agreement of the network. Payments cannot be reversed and chargeback is not available.
Ripple Labs has its head office in USA but has 9 global offices across the world and serves more than 300 financial institutions located in over 40 countries with its ‘RippleNet’ technology. The network has its own native cryptocurrency known as XRP.
RippleNet is a global network that connects hundreds of financial institutions through a single application interface (API) that facilitates swift and reliable money transfers at pocket friendly costs. RippleX is an open platform that enables developers to integrate blockchain technology into their applications. Built on the XRP ledger, it allows developers to send and receive payments with any currency, on any network anywhere in the world.
When compared to the Bitcoin blockchain network, Ripple is faster, costs less and uses less energy. But among all cryptocurrencies, investing in Bitcoin is still the most popular probably because it is the first and the biggest by market capitalization. But unlike Bitcoin, Ripple is not solely designed to function as a cryptocurrency. Rather, it is a platform that uses an open-source protocol to provide secure, fast and very cheap transactions. Ripple and XRP are often used interchangeably, but technically, XRP refers to the digital cryptocurrency while Ripple is the company that created it.
Just like all cryptocurrencies, XRP can be bought through online crypto exchanges and stored in a wallet; which may be digital, hard wallet or paper wallet. A few exchanges allow buying of the XRP tokens directly with fiat currency through credit/debit cards or bank transfers. Some other exchanges will not allow direct buying of XRP, but conversion from other cryptocurrencies. Investing in Ripple tokens can be done by buying it and keeping it in your wallet. The investor can then wait for the prices to appreciate before selling.
Ripple or XRP Contract for differences (CFDs) are over the counter (OTC) derivatives which enables traders or investors to speculate on the fluctuating prices of the underlying XRP token without assuming ownership of the cryptocurrency. The trader only tries to predict whether the price of the crypto coin will go up or down within the contract time; that is, the price difference from the trade entry price to the exit price.
Retail and institutional traders have access to trade cryptocurrency CFDs through online brokers who provide access to software trading platforms in which all client trades are placed. The broker displays the ‘buy’ and ‘sell’ prices of the XRP asset in real time. If the trader speculates an increase in price, he opens a ‘buy’ position but if his prediction is a price decline, he opens a ‘sell’ position on the trading platform. The trader is likely to make a profit if his prediction is correct and a loss if he is wrong.
T1Markets is a CFD broker that offers more than 300 assets for trading on the MT4 platform. It is operated by ‘General Capital Brokers Ltd’ (GCB) which is a firm that is authorized and regulated by the ‘Cyprus Securities and Exchange Commission’ (CySEC). The broker offers over 30 cryptocurrency assets. The crypto assets are paired with the popular fiat currencies e.g. XRPUSD, XRPEUR and XRPGBP.
If you choose to buy and store XRP tokens into a wallet, you will have to pay the full amount required. But, CFDs are traded on a leverage; a tool that is designed to give traders larger market exposure through a small capital. For example, if XRPUSD is quoted as 0.4986; and a trader wishes to open a position for 1,000 units on a leverage of 1:10. The total cost will be $498.60, but the broker only locks $49.86 from the trader’s balance to cover the full position.
With Leverage, investing in Ripple CFDs become cost efficient giving traders opportunities to open bigger trade positions. This increases his profit potentials as well as loss potentials. If the trader is on a winning trade, leverage multiplies his profits, but, if the trade reverses against him, leverage equally multiplies his losses.
One problem with owning the XRP tokens in wallets is the security of the wallet. Your private keys must only be known by you else it can be stolen. Access to digital wallets could be lost through system failures, fire disasters, burglary, etc. Already, many crypto coins have been permanently lost by investors. But this problem is eliminated by trading CFDs where you do not need wallets because you do not own the cryptocurrencies. You only speculate on the underlying cryptocurrency market while your profits or losses are calculated once you close the trade.
XRP CFDs are traded every day, even on weekends and public holidays. It is not regulated by any central authority so; traders can take advantage and trade at the most convenient time. It is good for both part time and full time traders.
Investing in Ripple tokens means that the investor waits and hopes for a bullish cryptocurrency market in order to make potential profits. But CFDs are different because the trader has trading possibilities in both bullish and bearish markets. He has the choice to go long or short, thus giving him opportunities for potential profits in all markets.
Generally, digital currencies are insanely volatile. This is one of the reasons why many banks that has adopted RippleNet technologies avoid using its native cryptocurrency; XRP. The price of XRP moves up and down quickly; this means that a trader can easily make quick potential profits if it moves in his favour, but also means that his trading account can be wiped off in jiffy if the market moves against his position.
Leverage is commonly referred to as ‘a double edged sword’ because of its ability to magnify potential profits as well as potential losses. The higher the leverage, the higher the potential profits if the trader’s speculation is right. But, if the market reverses against his position, leverage amplifies the losses. In this case, the higher the leverage, the higher the losses.
Every CFD broker charge for its services; either through the bid-ask spread or commissions. The amount charged depends on the broker and the contract size. Some brokers charge fixed commissions per lot traded while most brokers incorporate their fees into the spread; which is the difference between the quoted ‘ask’ and ‘bid’ prices of the asset.
Ripple Inc. is a private company that provides cutting edge payment solutions across the globe through blockchain technology that deploys a native cryptocurrency called XRP. Investing in Ripple tokens can be done by acquiring the cryptocurrency through exchanges and storing it in your wallet or by trading XRP CFDs which are usually paired with fiat popular currencies. CFDs are convenient, cost efficient and provides trading opportunities in both bear and bull markets. However, CFDs are risky because the trader can lose all or part of his invested capital.
T1Markets is a CySEC regulated CFD broker that offers access to trade cryptocurrencies, commodities, forex, indices and stock CFDs. The MT4 trading platform is provided to all clients for real-time quotes, trading, and analyses. The broker charges for its services from its spreads which are competitive. It executes all client orders within fractions of a second. Clients are supported with comprehensive educational resources comprising of videos, articles and eBooks. Trading tools such as economic calendar, daily news and other platform tools are also provided.
These are contract agreements between traders and online brokers which pays the difference between the entry and exit prices of the underlying XRP token. The trader only speculates on the prices of the XRP crypto as displayed on the broker’s trading platform. He does not own the cryptocurrency.
It is very possible, but also very difficult. Investing in Ripple CFDs can be very risky, time-consuming and requires a lot of disciple and patience. The trader must have outstanding trading skills, huge trading capital, comprehensive trading knowledge, rugged trading strategies and excellent risk management methods in order to have a chance. There are no guarantees.
No! Investing in Ripple is risky, just like most investments. The price of Ripple token is volatile and a trader may lose his investment or capital at any time.
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