Investing in XRP - Market Trends & XRP Review | Notum
Apr 21, 20235 min read
What Is XRP?
In 2011 Jeb McCaleb and Chris Larsen founded Ripple. XRP is a native token of the Ripple. It is an Ethereum-based coin. It is important to separate Ripple from XRP, they are not the same structure. Ripple is a technology company, which created XRP coins to use to solve their problems. This small detail differs XRP from the rest of cryptocurrencies. Generally, this company produces payment solutions for the global financial market. It is exciting that the idea that led to the creation of the new cryptocurrency is actually the same that formed the basis of Bitcoin. In particular, it was the desire to find faster and cheaper solution for global payments.
XRP has a limited supply of 100 billion tokens. Unlike a lot of tokens that require mining, XRP is premined, meaning that tokens were mined before it was officially launched. A total supply was divided into two main parts. 80 billion XRP went to Ripple. 55 billion of them were locked in an escrow account. This can ensure token’s supply in a stable way.
20 billion tokens went to the team members of the project.
Of course, XRP was created as a potential rival of Bitcoin. For a number of characteristics it actually exceeds BTC. For example, its transaction time is shorter, it is more scalable and cost-effective. Moreover, it seems to be greener in mining.
XRP operates on its own blockchain, called XRP Ledger (XRPL). Ripple participates in facilitating XRP transactions via its RTXP protocol.
The main purpose of the XRPL network is still cross-border transactions. The blockchain has several unique features that make it interesting against the other projects. Let's have a glance at them!
Decentralized Exchange Service
XRPL has a built-in decentralized exchange, which is supposed to make users’ life a little easier. They can swap assets they possess right on the platform. This eliminates risks that occur when coins are being transferred to other platforms. Moreover, it means that there is no need to use the third party while making an exchange.
Energy consumption is one of the most discussed problems by crypto enthusiasts. Its data is being constantly compared to rates of energy consumption by other industries.
It seems that XRP was able to find a solution. The network uses a consensus mechanism that appears to be more effective than the proof-of-work. It succeeded not only in making XRP more environmentally friendly, but also in reducing fees and increasing the speed of transactions.
Federated sidechain is a work in progress, but it will be an important step forward enabling development of applications that will not affect the capacity of the main chain.
Users are able to create their own custom tokens using the XRPL blockchain. Undoubtedly, this adds use-cases for the token and makes users’ experience more flexible.
Fees can be one of the biggest pains when it comes to crypto. The fact that XRP managed to make costs efficient makes it more attractive to potential investors.
What Are XRP Market Trends?
The XRP token had a bumpy road to the position it takes now. It was launched in 2012 and it took almost five years before it had a significant increase in price. In 2015 FinCEN charged Ripple for violating a Bank Secrecy Act. In 2018 XRP skyrocketed and for a brief moment it became the second most valuable cryptocurrency after Bitcoin. It seems that the surge was triggered by rumors about a new Ripple product that was supposed to fasten bank transactions. Since this product was expected to use XRP it motivated investors to purchase more coins. Thus, sharply increased demand pushed the price up.
After this there was a moment of dramatic decrease in price. In 2019 some stakeholders decided to file a lawsuit against the company, because they got a feeling of upcoming defraud. In 2020 SEC filed charges against Ripple and XRP. As a result the token was delisted from major exchanges. Undoubtedly, it added to the factors that were pushing the token price down. Surprisingly, this event didn’t shake the popularity of the coin so much, and in 2021 the price started to grow again. It was during this crypto boom, when XRP was able to break the trend and change it to the bullish one.
At the moment the XRP price is $0.47. If we take a look at the overall dynamic, we can see that recently the price has been developing steadily without any sudden jumps or falls.
XRP market capitalization is $24,411,787,277 USD, which makes it the sixth most popular cryptocurrency. However, it is interesting to look at possible price drivers at the moment. The whole story with the SEC charges left a trace, and it may be so that the continuous trial pushes the price up.
Whatever the driver is, according to WalletInvestor.com the price is going to start growing. Nonetheless, the prognosis for the current year shows that the price will most likely fluctuate between $0.4 and $0.6. The next year may bring more bullish performance.
Investing in XRP
There are some facts about XRP that are good to acknowledge before investing. For example, keeping in mind the fact that one of the main price drivers at the moment is an ongoing trial, an investor could base his strategy on this. On the other hand, in spite of the SEC charges, Ripple didn’t stop developing. Vice versa, it continued its growth and can offer more opportunities than before.
Ripple has announced a major partnership with FIFA, which will bring the network into the NFT world. It cannot go unnoticed, since it is one of the most popular fields in recent months.
In addition, Ripple became a network that powers the Futureverse, a project that provides an interesting view on the technologies of the future and offers a decentralized way of communication and creation.
Such progressive improvement makes XRP quite an attractive asset for investments.
Probably, the only difficulty that may occur is the fact that it’s still not back to all the exchanges. So purchasing and selling XRP may become a little challenging. However, it is good to notice that XRP got back to some services such as Binance, Kraken, Huobi, Bitfinex, etc.
Even though at the moment it looks like there are no reasons for XRP to change the trend to downgoing, the result of the trial is still to come. It may change the situation in an unexpected way.
So far XRP seems to be a reliable and strong project, however, it is good to remember that all crypto investments are highly risky and unpredictable.
XRP is definitely an interesting project. It deserves attention at least for its capability to stay strong during tough times. It also means that the team was able to create a supportive community that helped to maintain this network. This probably means their determination in their future work.
Even though there is no way to make an accurate price prediction for a cryptocurrency, business analysts are mostly confident in the growth opportunity for the XRP token. The potential of this coin shows that it may surprise its holders in the future with more new features and collaborations.
Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.