Compared to Bitcoin, XRP may not be very popular, but it is actually the third largest cryptocurrency by market cap. Based on this, would the growing interest in XRP for one or another reason and its increased use in banking systems make it a good investment? In our news, we will seek an answer to this question with the pros and cons of XRP.
First of all, what is to be invested in should be known in detail. First, the primary reason why XRP was created is that it is used as a token to facilitate cross-border money transfers through the Ripple network. Existing settlement systems for transactions such as SWIFT and Paypal often use the US dollar as a common currency for conversion, resulting in a loss of money and time. In contrast, the purpose of XRP is to act as a mediator that is settled almost instantly. It does this through RippleNet, a liquidity solution that uses XRP developed to make those long and expensive transactions a thing of the past. XRP acts as a currency in the network.
Since its launch in 2013, XRP has seen some crazy price movements in its history. By 2017, its price had barely reached over $ 0.01. However, its price started to increase significantly in March and April of that year. It increased to $ 0.05 at the end of April. It increased to $ 0.25 at the end of May. It pulled back a bit in the coming months, but then the price took flight as 2017 was ending and 2018 was born. Its price rose to $ 3.84 on January 4, 2018. However, in two weeks it lost more than half of its value. It was around $ 0.30 in early 2019 and hasn’t climbed above $ 0.68 since the beginning of the year. Now let’s come to the pros and cons of XRP as an investment.
Pros of Investing in XRP
Its technology allows for almost instantaneous and negligibly cheap financial transactions (less than $ 0.01). It also has enormous scalability, which can process 1,500 transactions per second a thousand times faster than Bitcoin. For these reasons, it received the support of many multinational banks and financial institutions such as JP Morgan, Santander and Bank of America. Especially in June 2019, a strategic agreement was signed between Ripple and the global money transfer giant MoneyGram. Such agreements can certainly be interpreted by potential investors as XRP has become meaningful.
Also, when you invest in XRP, you don’t just invest in currency. You also invest in the company. Ripple is a company with more than 500 employees, from those who support the currency in marketing to those working on the technology side of the business. If the company continues to grow and is successful, the currency will certainly follow suit.
Cons of Investing in XRP
XRP is at times criticized by people in the crypto community and seen as a central banker currency. Ripple’s collaboration with financial institutions is said to go against Satoshi Nakamoto’s reason why he created Bitcoin in the first place.
Another criticism he gets is the fact that mining cannot be done like Bitcoin and many other cryptocurrencies. The advantage of owning a mining-based cryptocurrency is that market conditions can at least partially help determine how much effort goes into creating new blocks on the blockchain, which can affect the price. If the price of a cryptocurrency is lower, less mining usually takes place because it is expensive to do so, or vice versa when it comes to the opposite scenario.
While there are accusations that Ripple may have some sort of malicious intent by holding these cryptocurrencies, the company insists they have good reasons for this. Each month, they extract a certain amount of money from their ledger deposits, up to a maximum of one billion. However, much less than that is actually put on the market and the unused amount is rolled over to the next month. This is said to be done, so at least there won’t be a spike in XRP supply or a drop in price. On the other hand, this can certainly be seen as positive as investors are less likely to liquidate themselves due to a sudden market movement. In other words, in a sudden decrease, a new rapid decrease is prevented with sales pressure.
Is XRP A Good Investment?
XRP can be viewed as a good investment because of the huge potential it has to grow. Its low price makes it a good investment opportunity. It has also seen its use among multinational banks increasing due to its use as a token for ultra-fast money transfers through the Ripple network at ultra-low fees.
While XRP is a good investment overall, any investor really needs to weigh the pros and cons for themselves. If you’re ready for a long-term investment, XRP can be a good investment. It’s also still inexpensive and a great opportunity for first-time investors.