Ripple Analysis | Is XRP A Good Investment?

Ripple is a digital cryptocurrency asset designed to facilitate real-time global payments without the need for a third-party intermediary. This cryptocurrency is seen by some investors as an attractive alternative to Bitcoin. This altcoin is available to investors on cryptocurrency exchanges and at brokers such as AdroFx. Before you start investing, let us learn more about its mechanisms as well as price forecasts and perspectives.

History Of Ripple

Work on the launch of Ripple began long before the advent of blockchain and the first cryptocurrency. In 2004, Canadian programmer Ryan Fugger began developing an interbank transfer system called Ripple and released the first version a year later. Therefore, there is every reason to claim that Ripple is older than Bitcoin.

Unlike many cryptocurrencies, XRP has a legal entity, official developers, offices, and headquarters in South Carolina, USA. This is a great advantage for investors in terms of secure investments.

Money in the system was transferred through chains of mutual trust. In 2012, with the development of the Ripple Transaction Protocol, the technology received a second life. Thanks to the new protocol, users of the system were able to exchange currencies instantly, both fiat and digital.

Is XRP a Good Investment?

The turning point in the history of Ripple was the launch of RippleLabs in 2014, founded by Jed McCaleb and focused on cooperation with banking organizations. At that time, the company's first serious client was Munich-based Fidor Bank. Starting to work with international payments in 2016, Ripple received support from the world's largest banks, such as Santander, UniCredit, Royal Bank of Canada, and others.

Thus, the main goal of the cryptocurrency Ripple project was to create a settlement system with minimal or no fees.

As we can see, the team managed to make the idea come true, and the innovative payment system was also distinguished by its unheard-of speed of operation and refusal from mining.

How Ripple Works

Ripple operates differently from other cryptocurrencies due to its unique payment gateway technology, collaboration with banks, and absence of mining. The creators of XRP issued 100 billion coins by abandoning the idea of mining, with each XRP coin divided into 1 million drops. This eliminates the need for the network to consume large amounts of energy to issue new coins and enables the XRP blockchain to process transactions in seconds, compared to Bitcoin's 600 seconds. This high speed allows for cheaper transactions, making Ripple a fast and profitable payment instrument.

Unlike traditional mining in which users find new blocks and attach them to the blockchain to receive a reward, there is no mining in the Ripple network. Users can only purchase XRP coins, and the number of coins decreases after each operation in the network, causing the value of each Ripple to increase over time. However, Ripple offers a different type of mining where users can earn coins by using the processing power of their computers to perform calculations and other actions prescribed by the system when participating in mining the company's new projects.

In terms of its overall scheme, Ripple is comparable to the global payment system SWIFT. However, instead of a central processor, there is a decentralized distributed network, which provides a higher level of reliability and protection of user data. It is important to note the difference between Ripple and XRP as Ripple has three separately functioning systems - xCurrent, xRapid, and xVia. Users should not associate a cryptocurrency and a project because most systems are inextricably linked to their tokens in other cases, but this is not the case with Ripple.

Ripple Price Over Time

The rapid growth of the value of Ripple began in May 2017. In two months, the coin increased in price 20 times. The maximum price for XRP was recorded in January 2018, when the coin price rose above $3 per token. The reason for this growth was the big spurt of the whole cryptocurrency market, which we saw in late 2017 - early 2018.

XRP/USD weekly chart

Generally speaking, when it comes to the value of tokens, Ripple has a very stable rate compared to other cryptocurrencies. It is not as sharp and speculative as Bitcoin, but more reliable. The rate of the coin grows smoothly, without explosive growth, and off-the-chart figures. The value of Ripple grows slowly but surely, which has a positive effect on the reliability of investments.

The SEC Vs. Ripple Lawsuit: Everything You Need To Know

In December 2020, the Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, accusing the company of selling unlicensed securities totaling $600 million. The securities in question were cryptocurrencies, specifically XRP, which was created by Ripple's founders. The lawsuit is still ongoing, despite Ripple CEO Brad Garlinghouse instructing the company to buy back shares issued in a 2019 funding round that raised $200 million.

In late 2021, Fox Business published an investigation suggesting that SEC employees linked to Ethereum could be behind the lawsuit, which has added to the controversy. Ripple supporters are hopeful that the new head of the SEC, Gary Gensler, will resolve the issue, given his experience as the former head of the U.S. Commodity Futures Trading Commission (CFTC). However, the SEC maintains its stance that the crypto market requires strict regulation.

Former SEC official Joseph Hall believes that the lawsuit could drag on for years, as neither side is likely to make concessions. Traders considering investing in XRP should closely monitor the ongoing litigation. The lawsuit has already had consequences, with several exchanges, including Coinbase, delisting XRP, and the cryptocurrency's price fluctuating in response to news of the case.

During the trial, XRP fell out of the top five cryptocurrencies by market cap, behind Bitcoin, Ether, BNB, and two popular stablecoins, USDT and USDC. The outcome of the case could have further positive or negative effects on XRP's value, and another round of litigation could push it even further down the rankings.

What Banks Are Backing Ripple?

Ripple cryptocurrency initially developed in close cooperation with banks. The largest banking institutions and reputable corporations were immediately interested in its possibilities. In 2016, more than $55 million was invested in the project, including Google, and in 2017 Ripple began partnering with the National Bank of Abu Dhabi, the largest bank in Japan, Taiwan, Korea, China, and other Asian countries. British bank Santander, Royal Bank of Canada, and Bank of America are also among the investors.

At least 38 of the world's top 100 banks have tested, integrated, or invested in Ripple's cross-border payment technology, according to XRPArcade. The largest of these is Japan's Mitsubishi UFJ Financial Group, which collectively has more than $2.5 trillion in assets.

Other partners of the blockchain startup are:

• Britain's largest financial conglomerate HSBC Holdings PLC, linked to Ripple through SABB Bank;
• Bank of America, partnering through investment bank Merryl Lynch;
• French financial conglomerate Crédit Agricole as a client.

The XRPArcade report highlights that there may actually be more Ripple partner banks. The reason for this is that companies are connected to blockchain startup through third-party organizations.

Collaboration with the world's leading banks gives Ripple a level of reliability that other cryptocurrencies do not have. Moreover, the development of reliable partnerships with those who control all finances allows Ripple to claim the status of the world's reserve currency. And why not? As a free payment system, Ripple is already creating serious competition for Western Union, and as a digital currency, it surpasses Bitcoin in many key criteria.

Potential Pros And Cons Of Investing In Ripple

One of the advantages of Ripple is the liquidity of this asset, which makes it easy to buy and sell. This makes the altcoin a great option for investors who want to make a quick profit through trading. In addition, XRP attracts the attention of investors with its high scalability, decentralized system, and increased transaction speed in the network.

It should be noted that investing in Ripple comes with a number of risks that potential investors should be aware of before investing their money. While this cryptocurrency may offer some benefits, the risks associated with it may outweigh the potential benefits. AdroFx provides analytical tools, daily market analysis, and training materials. This will help reduce the risks in the trading process.

What Are The Prospects Of Ripple?

Investing in any project requires a comprehensive assessment. Everyone who invests in a digital asset is interested in growth prospects: whether and when its value will grow (preferably sooner). The reality is that many cryptocurrency projects are launched only for the quick profit of their creators, without any basis for serious development.

Therefore, before investing in a crypto-currency, make sure it is worth buying, when, according to experts, its value will take off, and whether it will take off at all. You should definitely give preference to currencies already recognized by reputable banks and organizations.

Whether Ripple will rise in value also depends on the general mood of the market. Bitcoin is still at the head of the locomotive, and if BTC goes up in price, Ripple and other cryptocurrencies will go up after it. Also, we should not be surprised by what happens to the XRP price if the BTC price falls sharply.

Should You Invest In Ripple?

We believe that Ripple is one of the most popular cryptocurrencies, and investors are increasingly turning to it as a safe and secure investment option. Low fees, fast transactions, high security, scalability, and liquidity make it an attractive option for people who want to make fast and secure cross-border payments. For traders, AdroFx provides a convenient trading environment for XRP trading, as well as educational materials for those new to investing.

Conclusion

The growing popularity of Ripple technology does not necessarily imply the growth of XRP tokens, as is the case with fully decentralized cryptocurrency systems. And even if Ripple grows by leaps and bounds and becomes increasingly popular among investors, its tokens could remain at current levels and even decline in value. However, the deflationary model, which involves reducing the number of tokens after each transaction, should gradually increase the value of tokens.