Pros of Ripple
- Quick transactions on an innovative network
- Ripple works with many leading financial institutions
Cons of Ripple
- Reputation damaged by SEC lawsuit
- Many exchanges halted XRP trading in the U.S.
History – A brief history of Ripple
American programmer Ryan Fugger initially created the Ripple concept back in 2004. His stated ambition was to deliver a “new kind of monetary system based on the trust present in our ordinary social and business relationships”. He launched Ripple the following year, allowing users to extend credit lines to their friends, family, and associates, as well as make secure payments in traditional and online currencies.
The project stagnated after Fugger became unwell, but entrepreneur Jed McCaleb – the man that created the now-defunct Bitcoin exchange Mt Gox – would soon give it a new lease of life. He created a digital currency system called OpenCoin, which was designed to be a rival to Bitcoin, and brought in Arthur Britto and David Schwartz to help him build it. They approached Fugger with an offer to carry on the Ripple project by implementing a system that routed payments on a new blockchain.
Fugger agreed and handed the reins of the Ripple project to McCaleb. He brought in Chris Larsen, the founder of mortgage lender E-Loan, as a partner. They raised the necessary funds to scale up the project via an angel round with several venture capital firms. Ripple released its XRP coin in January 2013, and it has been possible to buy XRP ever since. XRP briefly became the world’s second-largest cryptocurrency in December 2017, and it has long been among the top five by market cap.
Development – The creation and development of Ripple
McCaleb created OpenCoin to provide an alternative to Bitcoin. XRP was fully incorporated into OpenCoin in 2013 in order to act as a bridge between multiple currencies. Some people therefore view it more as a remittance or settlement provider than a cryptocurrency. Bitcoin and various altcoins are mined, but XRP differs, because is verified by consensus among users instead. That theoretically requires less time and energy, and XRP essentially sacrifices decentralization in order to speed up transactions.
McCaleb and his team added trust lines, multihop payments and other innovations on top of the credit network that Fugger had created in order to flesh it out as a second-generation blockchain. OpenCoin was renamed Ripple Labs, Inc. in 2015, with Larsen and McCaleb listed as co-founders. It has since conducted several fundraising rounds, including a Series C round for $200 million in 2019, featuring Tetragon, SBI Holdings, and Route 66 Ventures.
Ripple is now known as a real-time gross settlement system and currency exchange that facilitates global financial transactions. It is used by several banks and financial institutions across the globe, including JP Morgan, Santander, Bank of America, MoneyGram, and this has added a degree of credibility to the crypto sector. Ripple Labs Inc. still issues and partially manages XRP, but it appears to be more focused on its RippleNet cross-border payment network. XRP is still the native currency of the platform, but anyone else using it can create their own.
Statistics – All you need to know about XRP trading
The Ripple team minted the entire supply of 100 billion XRP when the network was launched. It releases a portion of the supply from an escrow and sells them on the open market on an intermittent basis. In 2020, the number of tokens in circulation went past the 50 billion mark.
McCaleb departed his active role in the company in July 2013, leaving Larsen to run it as executive chairman, but in 2018 it was revealed that his XRP token ownership was worth $20 billion, which would put him at 40th place in Forbes’ list of world’s richest people at the time. At one point, Larsen overtook Facebook founder Mark Zuckerberg to be named the fifth richest person in the world by Forbes.
He holds around a third of all XRP, which is worth several billion dollars. Chief executive Brad Garlinghouse holds a significant amount of XRP too, as do other board members, and that large concentration among a small group has led to fears that the price can be overinflated.
A committee of validators maintains the XRP transaction ledger. Six of them are run by Ripple, and around 30 are independent. They reach consensus every 3-5 seconds, at which point they publish a new version of the ledger featuring the latest transactions.
Security, Features and Uses – How to buy Ripple safely
Ripple replaced Bitcoin’s proof-of-work consensus mechanism with its own consensus verification system, making it arguably less secure than Bitcoin. Yet that allows it to process transactions much more quickly, so the design of XRP essentially sacrifices decentralization for speed. Some people in the community argue that XRP is not a proper cryptocurrency, as it goes against the decentralized spirit of crypto.
Ripple is designed to solve issues in the banking sector. It allows the transfer of other currencies, or commodities such as oil or gold, over the Ripple network. The cost is deducted as a small amount of XRP, so many leading institutions buy XRP and take part in Ripple trading. JP Morgan and Bank of America are among the leading lights that have worked with Ripple.
However, XRP can also be used as currency at some sites. It does not have as many real world uses as Bitcoin or other altcoins – buy Ethereum or consider Litecoin trading if you want a currency that is more widely accepted – but there are various platforms that accept XRP. You can buy a VPN subscription at TorGuard, web hosting from sites like Snel.com, crypto hard wallets from Ledger or Trezor, and miners from Bitmart. Online retailer Galaxus accepts XRP, allowing you to purchase homeware, kitchen products, apparel, sports equipment, gadgets and much more.
In theory, you can buy XRP and use it to purchase almost anything, but the list of vendors accepting it is reasonably narrow. Ripple is much more prevalent in the financial world. XRP tokens are just one component of the wider Ripple ecosystem, with RippleNet at the heart of everything.
The company behind Ripple aims to overhaul the current global payments infrastructure by unlocking the power of blockchain, thus improving the speed, cost and reliability of online transactions. It wants to create a more inclusive financial system, and its ultimate goal is pretty lofty: spawning a new chapter in globalization, redefining entire industries and giving rise to new ones.
The biggest potential security threat is that open access might lead to vulnerabilities. Researchers at Purdue University studied the issue and deduced that the structure also allows for attacks on certain nodes within the network to cripple some users’ access to funds. They warned that tens of thousands of wallets could be compromised in the event of such an attack, which is worth bearing in mind if you plan to buy Ripple and use RippleNet.
Yet the researchers added that the ability to detect weaknesses in Ripple’s network could prove to be positive, because the conventional world of banking lacks transparency, and that Ripple’s developers can work on correcting weaknesses that are discovered and highlighted. You should always be careful of potential XRP trading scams, as the crypto sector is not heavily regulated, and you should always buy crypto online at reputable cryptocurrency exchanges that receive strong XRP trading reviews.
How to Trade – XRP trading for beginners
First you must identify a safe, reliable site that allows you to buy crypto currency online. XRP is one of the top five cryptocurrencies by market cap, so most exchanges historically allowed XRP trading. However, in January 2021, Coinbase, Binance, CrossTower and Beaxy announced that they would halt XRP trading for U.S. residents after the Securities and Exchange Commission filed a lawsuit against Ripple Labs.
The SEC claims that XRP is really a security as opposed to a cryptocurrency. Garlinghouse and Larsen were named as defendants in the lawsuit, which claims they knew that the cryptocurrency had a little use case, yet proceeded with selling the crypto for their own enrichment. Ripple pledged to fight the lawsuit, but Kraken followed suit by halting XRP trading in January 2021.
The delists only affect U.S. residents. Anyone residing elsewhere is unaffected. You can therefore simply get a VPN and use a leading site to buy XRP, or use a smaller exchange that still allows Ripple trading in the U.S.
Click on the “Get Started” button to create an account. You will need to enter your personal details and choose a password. Most Ripple trading sites require you to verify your email address and upload documents that confirm your identity and physical address. Once this process has been completed, you can begin to buy XRP.
Click on the “Buy / Sell” button and search for XRP on the list of cryptocurrencies. You can then choose your payment method. The best XRP trading sites will accept credit cards, digital wallets and wire transfers. Choose the amount you wish to spend in dollars and then click “Buy XRP”. It will tell you the XRP price or Ripple price, the amount you will receive and the exchange fee that you will be charged.
The best XRP trading exchanges also allow you to sell if you have XRP in your account. Enter the amount you wish to sell, the wallet you want to deposit to and click “Sell XRP”. You can also convert XRP to Bitcoin or other cryptocurrencies. You might like to buy Binance Coin or get involved in Bitcoin Cash trading, so you can exchange XRP for those coins and many more.
Future Outlook – What does the future hold for Ripple?
The future looks decidedly uncertain for XRP after the SEC filed a lawsuit against Ripple Labs. XRP rapidly lost 70% of its value after news of the lawsuit broke and various exchanges stopped allowing Americans to buy and sell XRP. It is difficult to make an XRP price prediction or Ripple price prediction until the legal challenge is resolved.
Analysts and traders have predicted that the market for XRP would rapidly evaporate and that prices will plunge if the SEC prevails in a legal battle with Ripple Labs. It claims Larsen and Garlinghouse raised more than $1.3 billion through an unregistered securities offering, having declared XRP to be a security rather than a cryptocurrency. Garlinghouse claims it is a cryptocurrency, and if the courts agree with him then XRP could be back in business.
It could rumble on, making an XRP prediction difficult. In terms of a Ripple prediction, the company has more strings to its bow than XRP, but it does risk insolvency if it cannot raise money by selling XRP and its other products do not prove to be profitable.
Reputation and Customer Feedback – What is the current consensus on Ripple?
Opinion is split about Ripple. Some laud it as a vital bridge currency that can lead the world of online transactions into a brave new era, but others say its business model is a pump and dump scheme and consider it to be a scam. Its reputation has certainly been tarnished by the SEC lawsuit, but its website is packed full of glowing reviews from customers, many of whom work for some of the most venerable financial institutions in the world.
Conclusion – Looking to invest in XRP?
Trading XRP is certainly a risky pursuit, but many people believe in its potential and feel it has a great future ahead of it. If you decide to buy XRP, you need to find a safe, secure and reputable trading exchange. That is more challenging with XRP than other cryptocurrencies, as many of them halted XRP trading for US customers after the December 2020 lawsuit, so make sure you do your research and find an established, trustworthy site that allows you to trade Ripple before investing in XRP.