XRP is the cryptocurrency used by the RippleNET payment platform. Banks and other traditional financial institutions are known for their slow and expensive transactions; Ripple is trying to build a global settlement network, specifically designed to solve these problems and provide a cheaper, faster, and friction-free payments system.
Ripple describes RippleNET as "a decentralized global network of banks and payment providers using Ripple's distributed financial technology, which provides real-time messaging, clearing, and settlement of financial transactions."
XRP is the native token fuelling the XRP ledger open-source software. There’s a total market capitalization of 100 billion XRP.
XRP not only has one of the fastest confirmation times in the industry but also is capable of handling around 1,500 transactions per second.
The current price of XRP
Although the total supply is large in comparison with other digital assets, not all XRP is circulating in the market. Ripple Labs still holds a sizable percentage of the total supply, which is reserved for the ongoing funding and development of RippleNET.
A big part of the XRP value proposition derives from the fact that a certain amount of XRP coins are burned after every transaction, making it deflationary by nature. Also, XRP requires a minimum of 20 XRP for every new wallet address assigned.
Like many cryptocurrencies, XRP doesn’t require a whole-unit purchase. You can buy tiny fractions of a single XRP with 0.000001 being the smallest unit, known as a "drop."
1 XRP: 1,000,000 drops.
As of late August 2021, XRP was hovering around the $1.15 mark, having increased roughly 380% year to date. XRP is currently the 6th-largest digital asset with a total market cap of $53.3 billion. The coin regularly experiences daily trading volumes upwards of $5 billion.
How the price of XRP is determined
A common view of cryptocurrencies is that they have no intrinsic value.
While this may ring true compared with traditional financial assets, cryptocurrencies do in fact possess enormous intrinsic value. They represent the first time in history that anyone, virtually anywhere with a smartphone or laptop can move value worldwide without touching the legacy financial system.
The price of XRP is ultimately determined by the law of the market supply and demand. Traders put up asking (selling) and bids (buying) orders and the order book matching process at exchanges creates the current XRP price chart, No surprise: it’s constantly changing.
What the bulls are saying
*Superior transaction speed: XRP harnesses throughput speeds of nearly 1,500 transactions per second (TPS) with finality achieved almost instantly (4 seconds). For some context, Bitcoin tractions generally take 10 minutes prior to final confirmation.
*Focus on banking, remittances: Ripple is actively seeking to incentivize large financial institutions to leverage its services. Currently, inter-bank money transfers are dominated by SWIFT a slow (and old) wire service. Ripple and its native XRP are seen as a faster, low-cost alternative. Transactions on the Ripple network cost a mere 0.0001 XRP ($0.00012 at the time of writing) and are secured by a global network of computer operators, rather than a centralized intermediary. Considering popular remittance services such as Western Union charge anywhere from $5 to $75 (roughly) per transaction, XRP could be poised to dominate a space worth nearly $550 billion annually.
What the bears are saying
*Lingering legal concerns: Ripple Labs, the firm connected with XRP, is currently in the midst of a legal battle with the U.S. Securities and Exchange Commission. The source of the conflict: whether Ripple should be required to register XRP as a security. The SEC says yes. Ripple is disputing the claim.
*Competition coming fast: Also entering the realm of ultra-fast, decentralized payments is Stellar and its native currency XLM. Free of regulatory headaches, Stellar could be poised to challenge Ripple as a leader in decentralized remittance solutions.
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This article is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice and before taking any action you should consult your own advisors. Note that digital assets such as cryptocurrencies present unique risks for investors. Please see our disclaimer regarding risks specific to holding digital assets before investing.
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This content is correct as of October 2020
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