One of the most intriguing is Ripple, which is completely different from all the others because it is a much more centralized cryptocurrency in a highly decentralized environment. What is Ripple? It is still classified as cryptocurrency, but the form it was founded on and managed and exchanged is very different from the others. That’s why, before investing in Ripple, it’s a good idea to learn more about it.
Ripple vs. Bitcoin: What’s the difference?
While Bitcoin is a digital currency designed to be a means of payment for goods and services, Ripple is a payment system, an exchange platform and a means of payment sent to banks and other payment networks. The idea is to provide a direct asset transfer system, such as money or gold, that would work virtually in real time, acting as a cheaper, safer and more transparent alternative to the other systems currently used by banks, such as SWIFT.
Bitcoin is based on the blockchain, while Ripple does not use it. Instead, it uses a distributed ledger consensus based on a network of verification servers and tokens called XPRs.
It seems that banks are very interested in Ripple, with more and more payment processors joining the network. Ripple is designed for business, and while it can also be used by individuals, it is not its primary purpose. The platform is designed to transfer large amounts of money around the world as quickly as possible.
From its inception until now, Ripple has been stable and reliable. Its current capacity is 1,500 transactions per second, while the recent update has made it possible to adapt the network to the VISA capacity of 50,000 tps. Meanwhile, Bitcoin is able to process only 3 to 6 transactions per second, and Ethereum, 15.
The Ripple token, XPR, cannot be extracted as Bitcoin, Ether, Litecoin and many other crypto-currencies. All chips were issued at the time of Ripple’s creation, just as a company would issue a certain number of shares when it becomes public. The creators of Ripple agreed to issue a specific number of XPR i.e., 100B XPR.
What is XRP?
XPR is often called “real cryptocurrency”; it is a token that uses the Ripple network to allow money transfers between different currencies. Most clearing systems nowadays use the US dollar as the base currency for conversion. This results in conversion fees and takes time, so bank transfers abroad can take three business days or more.
Converting an amount to XPR instead of USD removes the conversion fee, while the transaction is processed in seconds.
Recently, Ripple added another feature, which allows the company to release 1B of XPR each month through self-executing contracts to finance commercial transactions, offer incentives to its customers and sell tokens to verified investors. Tokens that are not used are returned to escrow.
Is it worth it to invest?
Ripple is the third largest market-cap cryptocurrency just after Bitcoin and Ethereum. Unlike these two, however, you cannot extract Ripple: as mentioned above, there are only 100B chips and they have already been issued. About 40% of these are in circulation, while the rest are from Ripple Labs.
Tokens are provided to the market gradually and in portions, $ 1 billion per month. This is to show investors that the entire stock will not be sold at the same time, which could have a negative impact on the price.
Whether it’s worth investing in Ripple or not, no one can be sure. Its value has greatly increased since its inception, but the future can hardly be predicted.
In the event that Ripple is able to ship more banks and completely transform the financial sector with its payment network, its price could skyrocket. If this does not happen and few investors continue to support Ripple, it could drop drastically.
Remember that the XPR price, as with any other cryptocurrency, is extremely volatile, so buying any cryptocurrency is risky, especially if you’re not a professional trader. However, with CFD (Difference Contract), you can use the high volatility of the cryptocurrency market in your favor, as trading CFDs can be both long and short, i.e. you can enjoy when the market is going up or down.
We suggest you open a free demo account with Libertex and try to make money with cryptocurrency independently. Apart from the cryptocurrency, you can also trade many other instruments, such as stocks and indices. And the best part is that while you’re trading on a demo account, you cannot lose anything! We must remind you that financial market transactions always carry risks. In this perspective, before starting to trade with real money.