Ripple XRP

About Ripple

Ripple is a digital payment network and a cryptocurrency with the ticker symbol XRP. Founded and published by RippleLabs in 2012, Ripple serves as a real-time gross settlement system (RTGS) and remittance network.

The purpose of Ripple is to enable fast financial transactions that are recorded by a blockchain. Ripple is one of the less decentralized cryptocurrencies as a private company, RippleLabs, issues XRP and controls many network nodes.

Money sent through RippleNet is not routed through intermediaries, no matter how complex the political borders involved. This makes payment much faster and cheaper than traditional methods like bank transfers and PayPal.

• Ripple can process around 1,500 transactions a second, making it several orders of magnitude faster than Bitcoin
• Ripple's transaction throughput can easily be scaled up in response to demand
• XRP is used by many major banks, like Standard Chartered and RBC
• XRP is also used by major businesses like Deloitte
• RippleNet is available across six continents, in more than fifty-five countries.

History of Ripple

Though the terms ‘Ripple’ and ‘XRP’ are used synonymously, technically they are distinct. Ripple is the name of the company behind the cryptocurrency XRP.

The earliest version of Ripple was conceived in the late 2000s as a network of trust where users could open credit lines with each another without the aid of a centralised broker or bank. Though this idea didn’t get much traction, the company would go on to make a greater impact with subsequent ventures.

In 2012, the company announced its launch, taking the name Opencoin. This was three years after the launch of Bitcoin, and the potential of crypto had started to become clear. Opencoin’s purpose at the outset was to act as a network where the currency, XRP, could facilitate transactions between disparate currencies and networks. Its primary audience was and remains large businesses and high-level financial institutions, which are known to place significant importance on the frictionless conversions allowed by XRP’s unique properties.

The company incorporated the Ripple name in 2013, becoming Ripple Labs. Its major product is a form of RTGS (or real-time gross settlement system), which comprises a distributed ledger and a native currency — namely XRP.

What determines Ripple's price?

XRP (the token of the Ripple Blockchain) is traded on crypto exchanges, with the price determined by supply and demand. The Ripple price is therefore the currently valid market price. The Ripple price rises when demand of XRP (= number of people that want to buy) exceeds the supply of XRP (= number of people that want to sell).

Ripple does not enjoy the same recognition as major rivals like Bitcoin. What’s more, the Ripple Network is not truly public, despite its decentralised nature. This reduces its appeal to the general public and makes it more of a niche product with specialised applications. This also limits its potential for the kind of truly explosive growth we’ve seen in BTC, and may lead to negative perceptions among traders.

After all, one of the major advantages of cryptocurrency is that it grants a degree of freedom from the whims of a single organisation. The reputation of Ripple Labs will have a sizeable impact on the price of XRP — though we should still consider that the ledger itself is open-source, and would persist even if the company were to cease operating.

The involvement of other major institutions will also help drive up confidence in Ripple, and thus the price of XRP. Were Ripple to become the standard method of carrying out cross-currency transactions, replacing longstanding organisations like SWIFT, then we should expect to see this reflected in the price of the currency.

By the same token, a widespread slump in demand for the service would drive down the price. As Ripple Labs itself has noted ‘XRP’s long-term value is determined by its utility — including its ability to help financial institutions source liquidity for payments into and out of emerging markets’. If there remains a use for the product then its popularity will reliably surge, and the price with it. Given that emerging markets have been, well, emerging over the past few decades, it’s reasonable to assume that a frictionless instrument for trading with them is going to be beneficial. Whether this potential is actually realised remains to be seen.

Ripple Price History

At launch in 2012, XRP was valued at just over $0.01. Since then, its fortunes have waxed considerably. XRP claimed 10% of the market in early 2017, momentarily pushing Ethereum into second place. Its price exploded in late 2018, shifting from a few cents to just under four dollars in the space of a few days, before rapidly correcting. This coincided with a broader boom felt across crypto markets more generally.

Since then, it’s climbed to $0.33 cents in the wake of the coronavirus pandemic, and then much higher later in the same year. In late 2020, the coin became the fourth most dominant cryptocurrency in terms of market capitalisation, claiming 5% of the total market — but it remains some way behind the frontrunners, Bitcoin and Ethereum, and has lost some of its advantages over the trailing pack.

Ripple Price Prediction

Any guesses about the future direction of the price of XRP are bound to be just that: guesses. It is impossible to know for certain whether investors will make a profit or loss on a given purchase — and there’s always the possibility that the price will fall to zero. It is incumbent on individual traders to judge what level of risk is appropriate, and invest accordingly.

With that caveat aside, there are several good reasons to be bullish about the prospects of XRP in 2021. Firstly, it’s likely to be more resilient to any legislation designed to clamp down on crypto, thanks to its privately-operated nature. As such, any tightening of the rules may see investors rapidly make the switch to XRP, thereby raising the price at the expense of other currencies.

Secondly, we should remember that more than half of Ripple assets are owned by Ripple Labs. This provides the company with a means of softening any sudden downward shocks by stocking the market with new coins.

Thirdly, we have a rising tide of digitisation amongst global financial institutions. Increasingly, bank customers are doing their business not through pen and paper, but through their mobile phones. This shift will play into the hands of technologies like the Ripple Network, which provide exactly the solution that many of these institutions are looking for.

Short-term price predictions see Ripple range between $4 and $0.05. The most wildly optimistic of predictions point to a rapid surge in the currency’s value of up to $200. While this might seem like a huge leap, we should bear in mind that 2017 saw a year-on-year increase of around 36,000%. While it would be unwise to over-extrapolate from this, we should note that surges of this kind are not impossible, and that even conservative voices project steady growth. Barring a catastrophe, the currency’s future looks reasonably bright.