Cryptocurrencies have come a long way since 2009, when Bitcoin, the world’s first virtual currency was launched. Nowadays, there are well over a thousand different alt-coins to choose from, each with their own characteristics, pros and cons, giving online traders a huge range of options.
As of February 2nd, 2018 Ripple (XRP) is the third most important cryptocurrency in terms of market capitalization behind Bitcoin (BTC) and Ethereum (ETH). Founded in 2012, Ripple is often considered to be the “Bitcoin for Banks”, because the Ripple payment protocol allows transactions of non-Ripple assets.
Major corporate clients and investors have flocked to Ripple, including large international banks such as Santander, UBS, Crédit Agricole, American Express, and Unicredit. The advantages are clear. If, for example, UBS wants to transfer a real-world asset such as silver to another organization, it can simply add it to the Ripple network (RTXP), allowing it to be transferred to a “trusted party” which handles the transaction. Best of all, using RTXP incurs only very small transaction fees.
What Makes Ripple Different
Unlike other cryptocurrencies, Ripple isn’t available for mining, the process by which data is authenticated for a fee by individual users or companies. All 100 billion coins on the network were created when it was launched. As of December 3rd, 2017, 55 billion coins were being held in escrow, 38.74 billion were distributed around the world and 6.25 billion were in the possession of Ripple.
This is one of the main reasons why there has been fierce debate about whether Ripple can properly be described as a cryptocurrency, since it is essentially a centralized currency.
The Risk In Ripple
As with any financial asset, the main risk while trading Ripple is that the price can go down as well as up. This is true of all cryptocurrencies, which are known to be particularly volatile assets. Last year, Ripple gained more than 38,361%, starting the year at USD 0.0065 and ending it at USD 2.50. Since the beginning of 2018, however, its price has already dropped as much as 39%. Nevertheless, the wide acceptance of the Ripple system among international banks and financial institutions is a good sign that major disruptions might take place in the future, pushing its price upwards.
Many of the top cryptocurrencies brokers offer Ripple in their cryptocurrency asset sections, enabling traders to take full advantage of its price swings. The Trade360.com platform is among the industry’s leading sites for crypto traders, with a wide range of tools and charts that enable members to make more informed and timely decisions.