Considering the current price of XRP being below $0.60, is it wise to invest in XRP?
Considering the current price of XRP being below $0.60, is it wise to invest in XRP?
Cryptocurrencies are back in the limelight, with Bitcoin experiencing a significant price rise of over 10% this month. Despite the media's attention being largely focused on Bitcoin, another long-standing coin, XRP (-3.12%), offers a distinctive chance.
XRP serves as the operational coin for the RippleNet payment service, which facilitates swift and affordable international money transfers. At the moment, XRP is trading slightly above $0.50, significantly below its all-time high of $2.70. Is this the right moment to invest?
XRP holds a distinct advantage
XRP sets itself apart in the crypto world by being intended for institutional use rather than the general public. While individuals can purchase and utilize XRP, its primary purpose is to facilitate transactions and payments between financial institutions such as banks.
Developed and released in 2012, XRP was created by a team of developers aiming to address the limitations they observed in Bitcoin, including inefficiencies, slow transaction times, high fees, and environmental impact.
XRP excels in speed
The primary beneficiaries of XRP are banks, which typically utilize a settlement network called the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Domestic or international bank transfers via SWIFT may take days, while Bitcoin transactions frequently take 10 minutes or more. However, XRP transactions only take a few seconds.
XRP shines in affordability
Bitcoin transaction fees can reach up to $20 or $30, and sometimes even more depending on market conditions. On the other hand, regular RippleNet transactions cost just a small fraction of a cent. For large cross-border bank transfers, RippleNet reduces costs by around 60% compared to SWIFT.
XRP demonstrates scalability
As compared to Bitcoin's limited ability to process a few transactions per second, RippleNet can handle up to 1,500 transactions, with potential for further improvement through optimization.
XRP showcases sustainability
The environmental concerns surrounding Bitcoin, with its enormous energy consumption equal to that of several countries a year, are often discussed. In contrast, RippleNet consumes only as much energy as 50 average households individually use annually.
Challenges faced by XRP
XRP, however, does have its drawbacks. The emphasis on "decentralization" in the crypto world often leads critics to view XRP as overly centralized. Ripple Labs, the company born from the original development team, is technically separate from the XRP cryptocurrency. The relationship between Ripple Labs and the XRP cryptocurrency, however, is not absolute, and investors often use the term "Ripple" in a general sense to refer to XRP, RippleNet, and Ripple Labs. This perceived overlap could be a matter of concern for some investors.
Furthermore, that Ripple Labs is engaged in a four-year legal battle with the Securities and Exchange Commission (SEC) does not help its case. The SEC alleges that XRP is essentially a security and that Ripple Labs raised funds illegally using it. While a judge has largely sided with Ripple Labs, the case remains unresolved as appeals are filed.
Another pressing concern is that banks utilizing Ripple's payment network do so without necessarily needing to use the XRP coin itself. This undermines XRP's main value proposition. At present, it appears unlikely that widespread use by the banking system and the resulting surge in demand will materialize.
The verdict
In my opinion, other options hold more promise. While XRP excels in speed and efficiency, it is not the only crypto to do so. At present, Ripple's success in the banking community hasn't translated into increased use of the coin. I believe there are better investment opportunities available, including Bitcoin, even at a price point slightly below $0.60.
Given the current legal battles and the use of Ripple's payment network without necessitating the use of XRP, some investors might question the future potential of XRP as an investment. In the realm of finance and investing, it's crucial to consider all factors before making a decision.
Regarding the potential for investing in XRP, the current price point offers a unique opportunity for those who believe in its future prospects, considering its advantages in speed, affordability, and scalability compared to many other cryptocurrencies.