Ripple (XRP) is a semi-decentralized payment protocol designed for major financial institutions to adopt.
Cryptocurrencies are becoming increasingly popular, but for the non-crypto enthusiasts, Bitcoin seems to be the only investment opportunity.
While it is true that Bitcoin leads the industry by market capitalization, there are countless other coins out there, each taking a different approach to the concept of digital currency.
Some of these coins are worth adding to your portfolio, and Ripple's XRP token might be one of them.
Keep reading if you want to learn more about how to buy the XRP token and why you may want to do that, even in light of the difficulty in buying it on major exchanges.
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What Is Ripple?
The San Francisco-based startup was initially founded in 2012 as OpenCoin, before rebranding to Ripple Labs in 2015.
The company's primary goal is to make cross-border financial transactions run as smoothly as possible by utilizing the blockchain's capability.
That led to the creation of the Ripple Network, which uses real-time gross settlement technology to enable immediate monetary payments across the globe.
Also, the firm creates software that banks use to enable quick, global financial transactions using the network's underlying cryptocurrency, XRP.
How Does Ripple Plan To Disrupt Global Finance?
Today, Ripple is one of the most successful blockchain projects that has made significant headway into real-world finance. Several financial institutions use it for solutions to process borderless transactions.
It achieves this through a single API, RippleNet, which serves as a simple gateway to accessing a vast network of money-processing platforms worldwide.
RippleNet, in turn, relies on the On-Demand Liquidity (ODL) service that leverages the digital asset XRP to source liquidity for instant settlement.
Thus, unlike the traditional approach, Ripple helps to decrease, if not eliminate, the need to pre-fund accounts during cross-border payments.
What Is XRP And How Is It Different Than Ripple?
Though most people continue to refer to XRP as "Ripple," the two are quite distinct from each other.
While it is true that the Ripple Network uses XRP as an independent digital currency to facilitate transactions, the XRP token is not run on the Ripple Network.
Instead, it exists on an independent blockchain infrastructure called the XRP Ledger.
Thus, Ripple is best thought of as the money transfer network bidding to challenge the conventions of our legacy financial systems.
How Does The Ripple Network Work?
The Ripple Network was initially implemented to replace SWIFT (a leading money transfer network that acts as a settlement layer between big financial institutions) by reducing costs and ensuring speedy transactions.
For a clearer understanding of Ripple, the SWIFT payment system was established in 1977 as a means for banks to send money across borders.
SWIFT is still the principal method used by most financial organizations today, despite its many flaws.
For example, cash transfers currently take 3 to 5 days to reach the recipient's bank account due to several clearances involved.
Ripple aims to bring a blockchain-based solution to these issues where XRP tokens serve as the decentralized liquidity source of liquidity.
With Ripple's XRapid payment service, banks can instantaneously transfer funds across borders while incurring near-zero transaction costs.
Is Ripple Better Than Bitcoin?
The answer is undoubtedly yes.
The Ripple ecosystem is a peer-to-peer digital payment network built on a decentralized protocol that employs a novel distributed consensus principle.
Thus, unlike Bitcoin, which relies on the graphics-intensive and environmentally unsafe approach Proof-of-Work mining, transactions in the Ripple ecosystem are validated through a set polling mechanism consisting of several virtual nodes.
This occurs almost instantly, allowing for quick confirmations without the use of a central authority.
Should I Invest In XRP?
XRP, like all cryptocurrencies, has advantages and disadvantages. The more investors understand these, the better equipped they will be to decide whether or not to accept XRP as a form of payment or include it in their investment portfolio.
Ripple Labs controls 60 billion XRP tokens out of the original 100 billion. The rest of the coins are freely sold on the market.
That has proven disadvantageous, as it's challenging to track XRP's value. Investors don't know when substantial amounts will be released into circulation.
In addition, Ripple was sued by the Securities and Exchange Commission (SEC) for not registering XRP tokens as a security. As a result, several investors, partners, and even crypto exchanges have withdrawn their support for the project until the situation is rectified.
However, on July 14, 2023, Ripple won the lawsuit against the SEC and it was declared NOT a security. This has caused the price to rally. But it's yet to be seen which exchanges may re-list the token.
How To Buy XRP?
Though many exchanges have delisted XRP on their market due to regulatory concerns, the coin is still presently listed on a handful of top-notch exchanges and stockbrokers.
The easiest to use and buy XRP is Uphold. You can follow the instructions below to buy XRP on Uphold exchange:
- Complete the KYC verification on Uphold after creating an account.
- Then go to your dashboard and click the deposit option to fund your account using any available payment methods.
- Next, go to the trade section and choose an appropriate trading pair to convert your money to XRP.
- Click the buy button after you've specified the amount you want to invest. Your wallet will be credited with XRP.
Note that other exchanges like Coinbase will NOT allow you to trade XRP.
How To Store XRP?
While you can keep your XRP on the exchange, it's not recommended - as exchanges are known to block access to accounts.
Instead, you should move your XRP to a hardware wallet like Ledger that supports it.
With a market cap of around $50 billion, XRP is the seventh-largest cryptocurrency. On January 4, 2018, XRP reached an all-time high of $3.84. After which the price plummeted to $0.12 and rose back to $1.05.
However, the project has recently found itself embattled with the problems posed by the SEC and investors' suspicion of the network's centralization.
Should these problems be solved, and given the role XRP will play in a possible paradigm shift for global finance, an investment in the coin might be worth the shot.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.