Every time we think that cryptocurrency cannot get any more popular, it comes back to smack us in the face with some new headlines. And then, they’re back on everybody’s newsfeeds!
In early 2018, cryptocurrency hit a market capitalization of $800 billion. This meant that for that short period of time, it was just as valuable as Alphabet, Google’s parent company. After that, cryptocurrency has seen many bad times as well until today.
In my previous articles, I have written a lot about Bitcoin and Ethereum. Today, I want to write about Ripple, as people have started wondering if Ripple will be the next Bitcoin.
Here are few things you need to know about Ripple, before you invest a dollar in it.
What is Ripple?
Bitcoin became very popular because it popularized the idea of a decentralized worldwide digital currency, which means it’s a currency that’s not regulated by any big bank, any government, or any private entity. It is controlled and managed by the users of Bitcoin.
So for a lot of people, Bitcoin was their way of getting rid of the intervention of the banking system.
Ripple is a bit different. Ripple works directly with the big banks, instead of trying to avoid them. So for some people, Ripple goes against what cryptocurrency is all about, and thus they’re not a fan of Ripple.
For others, this is great because the big banks and the government have a lot of power. If hypothetically, more banks started to use Ripple, it could potentially mean that Ripple coins will have more value later on.
How does Ripple or XRP work?
XRP is the token or coin for Ripple. Let’s say you want to send your money that’s sitting in your bank account to your cousin in London. To do this, you will have to go through a whole bunch of bank transfer fees, and it’s going to take days for your money to arrive into your cousin’s bank account.
The goal of Ripple is to move currency like we do information. Right now if you want to send an email to somebody in London, you can do it in an instant. But it takes like forever for your money to arrive there. Ripple is trying to change that.
Currently, Ripple lets you send currency to the other end of the world in about 3-4 seconds, and it will cost you less than a penny to do that. So it has a specific purpose.
But isn’t that what Bitcoin is supposed to allow you to do – move currency around without borders?
Yes, kind of. The problem is that using Bitcoin is not as practical as using Ripple. If we did the same transaction that I just talked about with Bitcoin, according to Ripple CEO, it would cost you around $40 and take few hours to settle. That’s why it’s not as usable as Ripple for this type of transactions.
In other words, all cryptocurrencies are not made the same.
How do you buy the Ripple coin or XRP?
Before talking about buying a Ripple coin, let me mention that you are never guaranteed to make money when you invest in anything. You might even lose money. That’s why you should speak to an attorney and a financial advisor in your area first, so that you understand all the local laws and regulations that govern investing.
Buying Ripple is a bit tricky. If you want to buy any cryptocurrency, you have to use a crypto exchange. But Ripple is not listed on every crypto exchange.
If you want to buy Ripple, you have to jump through a few hoops. Let me break down how to do that in 3 simple steps.
Step #1: Buy an easily accessible coin like Bitcoin or Ethereum on an exchange like Coinbase. This initial purchase could take some time because there are so many users coming into cryptocurrency lately.
Step #2: Once you own Ethereum or Bitcoin, transfer this coin on Coinbase onto an exchange that allows you to buy Ripple. One of the most popular exchanges that allows you to do this is called Binance.
Step #3: Once you have your Bitcoin or Ethereum on Binance, you can convert it to Ripple or XRP.
The reason why you have to jump through these steps is that if you use your dollars to buy Ripple, it could take you weeks to be verified enough to be able to do that. The process explained above makes it much faster.
This could actually change in the future, which is why you need to pay attention to what’s happening in the cryptocurrency world.
Protect yourself
You need to be aware of cryptocurrency scams, and protect yourself by getting to know about an exchange before starting to trade on it.
You can also protect yourself by adding an extra layer of security that allows you to store your cryptocurrency outside of the exchange with an external wallet. In other words, you would buy Bitcoin or Ripple like normal, but instead of letting your cryptocurrency sit on the exchange, you would take the crypto coin that you own and move it on to an external wallet. This way, if someone were to hack into the exchange, your coins would be out of the hacker’s reach.
There are a bunch of external wallets out there. Some are physical while others are online. So do your research and pick the one that you like best.
Understand the price of Ripple
There are about a hundred billion Ripple units in existence, and the majority of those coins are owned by the Ripple company itself. The value of each Ripple coin really comes down to how usable the coin is, and what somebody else is willing to pay for your Ripple coin. It’s the way supply and demand works. If you own Ripple, and lots of people want to buy it, then the price will naturally go up.
Lots of people have been excited about Ripple in the past couple of years because some big banks have invested hundreds of millions of dollars to test out Ripple. So if Ripple were to catch on, it could become a lot more valuable.
Ripple is kind of hard for the average person to get the hands on. Some people are speculating that if Ripple became more accessible by coming on to an exchange like Coinbase, it will have a huge influx of buyers, which will cause the price to go up.
But again, this is simply speculation. Nobody can predict the future.
Invest on financials, not on emotions
Can you make a lot of money with speculation? Sure, a lot of people did in the early 2000s with real estate, but it can really bite you off if you hold on too long, or if you take on more than you can afford.
In 2017, Ripple went from trading at point 0.006 cents a coin to over 2 dollars a coin in just one year. This means it went up by over 30,000 percent. That’s crazy!
But remember that just because something has gone up in the past, it doesn’t necessarily mean that it will continue going up. There’s a lot of hype and speculation behind the cryptocurrency, but hype and emotion cannot carry an asset up forever.
Cryptocurrency is very volatile, meaning it can go up very quickly, and it can come down just as fast.