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The Advantages of Ripple (XRP) as Big Banks Start Moving In

Ripple (XRP)–Ripple prides itself on being the cryptocurrency to connect banks with banks and other payment providers, with an emphasis on speed and ease of use. The tagline for the currency is One Frictionless Experience to Send Money Globally. The banner on the coin’s designated website proclaims Ripple to be “the world’s only enterprise blockchain solution for global payments.”

While nearly all cryptocurrencies designate themselves as an international currency or asset class, Ripple has taken the global approach to a new level with an emphasis on being a tool for banks around the world. Some, particularly those attracted to the libertarian politics and decentralized ethos of Bitcoin, hold a negative view of Ripple as cryptocurrency made for institutional bankers. However, the coin still offers benefit to individual investors and cryptocurrency advocates.

After a volatile year that saw the coin going from fractions of a penny at the start of 2017 to an all time high of 0.382 USD in May, RIpple’s price has fluctuated around one-fifth of a dollar over the last three months, with significant resistance in the 0.20 – 0.25 USD range. Good news for Ripple enthusiasts came earlier in the week, when it was announced that American Express–one of the U.S.’s largest credit card and financial services companies–had opened it’s first blockchain corridor to exchange money between England and the United States. Ripple’s technology allows the transfer of money to occur in under ten seconds, down significantly from the 1-2 day transaction time from banks using Swift or traditional ACH deposit/withdrawals.

The current drawback for potential Ripple investors is that, in the case of American Express, transactions are being made based solely on the Ripple blockchain technology without any conversion or exchange of the XRP coin. Howevever, with the rise of other blockchain-based currencies competing for institutional banking attention, some experts believe adoption of the XRP coin (which has a current market cap of 8.755 billion USD) will give Ripple a significant advantage. Marcus Treacher, Ripple’s global head of strategic accounts, alluded in an interview with Coindesk that the union of banks and financial service companies like American Express transacting with the XRP currency is the building block of the future ( Cuallix, a U.S.-Mexico based non-banking financial group, made headlines in October by becoming the first worldwide institution to utilize Ripple for cross-border transactions that used the conversion of fiat to XRP for liquidity. This could be a trend that many more bank-using financial services seek to follow due to lower costs and faster transaction times.

Here are a few more advantages of Ripple:

Long Term Stability and Decreased Volatility. Disclaimer: Investing in all forms of cyrptocurrency is a risk-based endeavor. However, due to the strong connection with banking institutions, many see Ripple as a relatively safer investment that offers long-term protection. Banks are unlikely to adopt and

invest in a technology they plan on abandoning in a year or two (unless a more attractive option comes along). Likewise, as more financial services utilize convertiing fiat to XRP for liquidity, they will value stability over volatility. If you are betting on the financial institution creating it’s own sphere in the crypto-market, Ripple is currently your most forthright currency.

Low Barrier to Entry and Whole-Coin-Ownership. As of writing, XRP is valued at 0.2259 USD. With the year-over-year gains and media spotlighting, Bitcoin will remain the obvious choice for investors new to the cryptocurrency sphere. However, you can’t rule out the effect of whole-coin-ownership. In the coming years, as the price of bitcoin continues to climb, it’s not hard to imagine the psychological hurdle for amateur investors to convert 1000 USD to 0.10 BTC (or less). Consider the following scenario: For 10 USD you can own 0.0012987 BTC or 44.27 XRP. While the the true value of the coin is only partly due to it’s fiat conversion rate, there is still the psychological effect of ownership. Transitioning to digial currency, particulary for older generations, is going to be as much of a social change as an economic one. Late-adopters of cryptocurrency, which includes at present the majority of the world’s population, are going to gravitate to the eye-widening gains of bitcoin, but will also be drawn to cheaper altcoins. This will translate into a buoyancy effect that raises the price of all coins as the market cap for cryptocurrency rises. Currently sitting at 4th in total market cap value (, and with a price tag just under 0.25 USD, Ripple is in position to be an attractive currency for crypto-newcomers over the next several years.

Ripple Seeks to Complement, Rather than Compete with Bitcoin. Any discussion on the value of an altcoin must contend with the behemoth that is bitcoin. In the case of Ripple, the coin’s current outlook does not seek to form a zero-sum game. Ripple is designed for large, financial institutions and speedy transactions involving varying currencies. While the current model centers around the transfer and conversion of fiat, for example Mexican Peso to USD, there is no argument against a future iteration that does the same with BTC, ETH, etc. The technology of Ripple’s blockchain may help form a bridge between bitcoin and the mainstream financial world.

At present, the primary disadvantage for potential investors in XRP is twofold: a lack of coin scarcity and  to-be-determined adoption. At the time of writing, there are 38.6 billion XRP coins in circulatioin, with the company planning to cap the number created at 100 billion. Even without issues of inflation, XRP lacks the scarcity appeal of Bitcoin and other limited circulation altcoins. There is also a fear among current Ripple investors that the company is pushing the blockchain technology to banks without promoting XRP adoption. We saw this realization earlier in the week when American Express announced it was not using the actual XRP currency for liquidity, but rather the blockchain technology itself as a tunnel for money transfer. If more and more banks choose to circumvent using the XRP coin, the currency will see a major loss in its security and appeal to the non-banking investor.



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