Compared to Bitcoin, many people might not know much about XRP (also known as Ripple), but it's still one of the biggest cryptocurrencies by market value, even after facing challenges like an SEC lawsuit. XRP looked promising before 2020, but the SEC accused Ripple of offering XRP as unregistered securities to the public, causing its value to drop.
Despite these setbacks, Ripple is still working on using blockchain technology for quick cross-border payments. Now, the big question is: Is Ripple (XRP) Still a Good Investment in 2023? Let's explore further.
What Is Ripple (XRP)?
Ripple is a technology that focuses on digital payments and currency exchange. It uses a decentralized concept called peer-to-peer (P2P) to quickly exchange different currencies and even gold. This means there's no need for later settlements between big financial institutions.
XRP is the native token of Ripple, and it's pre-mined with a total supply of 100 billion. It helps facilitate cross-border currency transfers within the Ripple network.
People sometimes confuse the name of the digital currency (XRP) with its parent network (Ripple). Ripple is the open-source protocol created by Ripple Labs, Inc. Ripple was launched in 2012 by its co-founders, Chris Larsen and Jed McCaleb. The goal of Ripple is to create a fast and efficient payment and remittance system to replace the traditional SWIFT system used for international money and security transfers.
How Does XRP Work?
Normally, settlement systems like SWIFT and PayPal use U.S. dollars for converting transactions. This can be costly and time-consuming. However, Ripple uses XRP as a mediator to settle transactions almost instantly and at a much lower cost through RippleNet.
With RippleNet, businesses don't need to hold pre-funded accounts in different currencies for international payments. Instead, they can use XRP to access liquidity quickly, freeing up capital and getting the best rates available. This makes transactions more reliable, fast, and affordable for financial institutions on the network.
Difference Between Ripple (XRP) and Other Cryptocurrencies
XRP stands out from cryptocurrencies like Litecoin (LTC), Ethereum (ETH), and Stellar (XLM) in its technology and how it operates.
XRP Doesn't Use a Blockchain: Unlike Bitcoin and many others, XRP doesn't work on a blockchain. Instead, it has its own unique technology called the Ripple Protocol consensus algorithm (RPCA). It uses a distributed consensus to verify transactions on the network, similar to how a blockchain operates.
XRP Is Decentralized: There's been some debate about whether XRP is decentralized or not, but it actually is. It follows a decentralized peer-to-peer (P2P) structure, relying on nodes to process transactions through a voting system. While it doesn't use a blockchain, its consensus protocol is similar. The advantage is that it consumes much less energy compared to Bitcoin.
You Can't Mine XRP: XRP cannot be mined like other cryptocurrencies. It has a fixed supply of 100 billion tokens, and they were all created in advance. Around 52 billion tokens are currently in circulation, while the rest are released periodically by Ripple from escrow.
About the Ripple Lawsuit
In December 2020, the SEC accused Ripple Labs and its top executives of raising over $1.3 billion without registering it as a security with the regulator. The lawsuit revolves around whether XRP is a security or just a cryptocurrency. If it is considered a security, it needs to be registered with the SEC. Ripple has strongly argued that XRP is not an investment contract but a digital currency used for cross-border payments on their platform.
In April 2023, during a congressional hearing, SEC Chairperson Gary Gensler couldn't give a clear answer as to whether XRP is a security or not. In May 2023, a U.S. federal judge refused to seal internal documents that contained a speech by a former SEC official. This was seen as a positive outcome for Ripple.
On July 13, 2023, a U.S. judge ruled that Ripple did not violate securities laws by selling XRP on public exchanges. This was a significant victory for Ripple and led to a 75% increase in the value of XRP. While the judge's decision applies specifically to this case, it might be helpful for other crypto companies facing similar legal battles with the SEC.
The SEC was partly pleased with the ruling as the judge found Ripple violated securities laws by selling XRP directly to sophisticated investors. The ruling can still be appealed once a final judgment is issued. The SEC is currently reviewing the decision.
XRP Price Prediction
As of June 5, 2023, XRP's price was $0.53. It had experienced an 84.22% drop from its all-time high of $3.40 in January 2018, but also a massive 19,000% increase from its low of $0.0027 in May 2014.
PricePrediction forecasts a cautious bullish outlook for XRP in 2025, with a potential price of $1.63. By 2030, it might even reach the $10 mark. Crowd Wisdom's analysts offer similar predictions, estimating a price of $1.80 in 2025 and $7.50 in 2030.
Investors wonder how much XRP could be worth if Ripple wins its SEC case. While nothing is certain in the crypto world, if the ruling favors Ripple and the SEC doesn't appeal, XRP's price could surpass its previous ATH of $3.40 and even reach $10. In favorable market conditions, the XRP price might go even higher, possibly reaching $20, $30, or even $50. However, it's essential to take these predictions with caution, as the crypto market can be unpredictable.
Pros and Cons of Investing in XRP
Advantages
Fast and Affordable: XRP transactions are lightning-fast and cost almost nothing (less than $0.01). It can handle 1,500 transactions per second, making it over a thousand times faster than Bitcoin.
Backed by Major Banks: Many big banks and financial institutions, like JPMorgan Chase, Santander Bank, and Bank of America, support XRP. The partnership with MoneyGram® also shows promising signs for XRP.
Strong Company: Ripple Labs, Inc. is a solid company with over 500 employees working on various aspects of the technology. If the company does well, XRP is likely to benefit too.
Disadvantages
Centralization Debate: Some see XRP as too centralized, as it cooperates with financial institutions, contradicting the idea of a fully decentralized currency like Bitcoin.
No Mining: Unlike Bitcoin and other cryptocurrencies, XRP cannot be mined. Some critics argue that this lack of mining can affect market conditions and pricing. Ripple has addressed these concerns by emphasizing the decentralization of the XRP Ledger. They release a certain amount of XRP coins monthly to avoid sudden supply surges and potential price crashes.
Is XRP Worth Investing In?
Investing in any asset, including digital currencies like XRP, comes with uncertainties. XRP's future is currently uncertain due to the ongoing lawsuit with the SEC and a decline in investor interest. However, if Ripple can resolve the lawsuit, it may lead to a strong price increase.
Despite the legal challenges, Ripple has been actively working to improve its brand and ecosystem. They have launched a platform for developing digital currencies and expanded their network in different regions to provide better payment options for businesses.
If you're someone who likes to invest in specific themes and diversify your portfolio, XRP could be a good option. However, it is important to be aware of the legal risks involved. A negative outcome in the SEC case could have a negative impact on the price of XRP. As an investor, carefully consider the pros and cons discussed earlier before making any decisions about investing in XRP.
