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Global digitalization did not only change our way of communication but actually altered our lifestyles altogether. From studying to shopping, entertainment, and even generating income, every aspect of our lives has evolved with this technological progression. Why wouldn’t our investment practices alter in the face of all of this? 

Undeniably, the burst of the dot-com bubble two decades ago played a huge role in diversifying our investment portfolios further. The introduction of cryptocurrency, especially bitcoin, pushed investment to a whole new level. However, the concept of investing in Ripple has become the talk of the town recently.

Ripple as a financial asset

Investing in financial assets is not a new thing to us. In fact, the concept dates back to as early as 3000 BC. Surprisingly, the idea of holding a portfolio of investments started as recently as the late 1960s.  But how does Ripple come into the scene? Since money is, by definition, a financial asset and Ripple is virtual money. This makes it a viable part of any portfolio.

Due to cryptocurrency’s stability and decentralized nature, investors find it an appealing investment option. As we speak, there are more than 6500 different cryptocurrencies today, and the list continues to grow. However, the most important amongst these are Ethereum, Litecoin, Cardano, Polkadot, and Bitcoin.

Surprisingly, Ripple showed quite a great potential in the past few years.  Investors are very curious about it and wonder if it is a worthwhile investment. This is due to it being cheaper and more convenient than the famous Bitcoin, which is usually compared to gold. 

But the question is, what makes Ripple a better option? Why would an investor let go of bitcoin and opt for Ripple when bitcoin is as stable as gold? The answers to these questions lie in the 15 reasons we shall provide as we progress.

Nevertheless, before we explore the feasibility of investing in Ripple, it is worthwhile to understand a few things about it.

What is Ripple?

First of all, Ripple itself is not a cryptocurrency. It is a real-time open source remittance network created by Ripple Labs that aims to facilitate cross-border payments globally.  Jed McCaleb and Chris Larsen launched the company in 2012. For better understanding, let us divide ripple into three parts.

• Ripple Labs is the company that develops XRP and other payment solutions for various banks and renowned organizations.

• XRP is the native currency found on the Ripple Network.

• RippleNet or Ripple Network is the official digital payment network. 

However, there is one thing we must keep in mind. That is, while other currencies are openly available to the public, XRP is only available to individuals that transect through Ripple Labs’ official network (RippleNet). Also, the main aim of cryptocurrency is to smoothen the currency exchange process. That means facilitating the buying and selling of goods or services is not the primary objective. For this reason, Ripple Labs mostly collaborate with financial institutions like banks and large corporations. Nevertheless, individuals may also avail the company’s services. 

The company mainly acts as a currency exchange network and a trusted agent. 

In short, Ripple is not just a cryptocurrency but a whole company.  It has 500 employees and 300 elite customers in 40 countries across six continents. Nonetheless, its operation is a bit complex.

How does Ripple work?

Unlike Bitcoin and other cryptocurrencies, Ripple XRP utilizes its own common ledger rather than the Blockchain. 

The Ripply system utilizes three main nodes, including

• Validators who validate the transactions

• Gateway nodes which are mainly the financial institutions

• Regular nodes, which are the regular users

When two parties want to make a transaction through ripple, this is what essentially happens:

• Two parties living in different parts of the world agree to proceed with a transaction involving different currencies.

• The sender selects a trustworthy gateway and makes the payment to them in a specific currency.  He/she then asks for the payment to be made to the recipient in a different currency.

• The gateway then converts the sender’s currency into XRP and transfers it to the recipient.

• The transaction is then validated by the validators.

• The recipient can then withdraw the money in the form of any currency equivalent to the value of the Ripple XRP transferred.

15 reasons why Ripple is an ideal investment option

Here is why Ripple is a good investment option:

1. Persistently increasing value

Since its inception in 2012, the cryptocurrency has provided an excellent 12,758.41% return to its investors. Additionally, experts do not see its value going down any time soon. Despite the current hurdle, in the shape of the SEC case, Ripple did not completely crash. 

2. Trust by renowned names

Numerous famous names like the American Express, Santander, and MoneyGram collaborate with Ripple. And names like VISA are actually considering the option to use the technology in the near future. This further proves that the cryptocurrency’s value will keep on increasing as more and more famous names adopt it. Hence, if you invest in it today, the chances that you will reap fruitful outcomes in the future are high.

3. Adoptability by mainstream financial institutions

Surprisingly, it is not just the renowned companies that have shown an interest in Ripple. Even the mainstream financial institutions utilize it. Some of these include Yes Bank, Axis Bank, BBVA, and many others. This level of confidence should definitely be a green light to potential investors. 

4. Scarce supply

Another good news for investors is Ripple’s limited supply. It is a known fact that once something is limited in supply, its value increases over time. Currently, Ripple’s supply is limited, but its demand seems to be increasing. Hence, investors should take advantage of the opportunity before Ripple becomes expensive.

5. Resistance to volatile market cycles

Ripple is a cryptocurrency. And for this reason, it is said to be recession-proof. While many investments and treasury bonds suffer due to the effects of the recession/inflation, Ripple remains intact. In light of the foregoing circumstances and the inevitable approaching recession, Ripple is quite a great option.

6. Affordable investment option

Notwithstanding Ripple’s amazing performance, it is still one of the most affordable cryptocurrencies. While one bitcoin is worth $62,327.19, an XRP is worth approximately a dollar. However, the currency will not always be so affordable. Apparently, early investors will benefit from the situation because sooner or later, the currency will increase in value.  

7. Low trading costs

Another great aspect about Ripple is its low transaction costs. This quality again makes it an enticing investment option because the cryptocurrency’s transfer process is almost free. The transaction costs are negligible, which makes selling and buying of Ripple cost-free.

8. High transaction speed

Apart from being cheap, Ripple-related transactions are speedy and seamless. In fact, Ripple’s transaction is actually the fastest among all cryptocurrencies. 

9. Premined

Unlike bitcoin, Ripple does not require the creation of artificial scarcity. This is because the currency is pre-mined. That is, no new Ripple’s XRP coins will be mined. 

10. It is not just a currency

As mentioned earlier, Ripple is not just a currency but a whole company. This means that the volatility that most cryptocurrencies have is diminished in this case. 

11. Upper hand in the SEC case

Perhaps the currency’s price is still low due to the hanging SEC case. But the prevailing circumstances suggest that Ripple has the upper hand in the case. Although it is too early to make any predictions, common sense says once Ripple wins the case, it will rise. 

12. Backed by Google

Another point that should act as a green signal for investors is that Google is one of Ripple’s investors. Even an average person knows that giants never opt for weaklings with little potential for growth. 

13.  No proof of work required

This is another advantage with regards to the Ripple transaction process. Unlike bitcoin, where proof of work is required, no such prerequisite exists for Ripple. 

14. Large market cap

Currently, Ripple’s market cap is $50 billion. This should be enough to demonstrate the currency’s potential for the future.

15. It is a hybrid!

The above discussion clearly shows that Ripple is not entirely decentralized. That means the company has some control over its value and the chances that it will collapse are slim.

Will Ripple replace SWIFT?

Definitely, you must have noticed that the process is very similar to the traditional SWIFT. However, Ripple is faster, more secure, and cheaper than the latter. On the other hand, the traditional SWIFT is not very swift as the name suggests. In fact, it takes hours and sometimes even days to process and confirm some transactions. And the high transaction costs just make matters worse.  

Contrarily, Ripple transactions are confirmed in a matter of minutes, and the transaction costs are almost zero. Besides, many experts believe that the technology will replace SWIFT. 

Will Ripple win the SEC case?

Perhaps the biggest hurdle in Ripple’s success is the lawsuit filed by the Securities and Exchange Commission. In 2020, SEC allegedly claimed that the company, Ripple Labs had failed to register their cryptocurrency XRP, as security. SEC claimed that  Ripple was involved in illegal trading for seven years. 

While it is hard to tell who will win, Ripple seems to be having the upper hand in the scenario. 

Overall, reward and risk go hand in hand. The idea is to know the limit of the investment. A loss in one of your investments should not leave you bankrupt. The idea is to maintain caution whenever making any investment decisions.

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Keith Dunn

Keith Dunn is a regular contributor at kredilife.com for technology and business niche articles. He is a retired IT Professional with technical expertise in Linux Server Administration. He also worked at the IT Startup he founded (LinuxHeads Inc. ) and has expansive knowledge about SME’s adn Start-ups.