The Daily Edge is authored by Ivan Delgado, 10y Forex Trader veteran & Market Insights Commentator at Global Prime. Feel free to follow Ivan on Twitter & Youtube weekly show. You can also subscribe to the mailing list to receive Ivan’s Daily wrap. The purpose of this content is to provide an assessment of the conditions, taking an in-depth look of market dynamics – fundamentals and technicals – determine daily biases and assist one’s trading decisions.
What is Ripple cryptocurrency?
In this guide, I will cover some of the pressing questions you may have about Ripple. A controversial, divisive and highly polarized cryptocurrency. The reason Ripple is so highly talked about in comparison to other cryptocurrency, comes down to the private nature of the San Francisco based fintech firm created by Jed McCaleb and Chris Larsen which was first released in 2012.
Ripple trades under the ticker XRP, it is the third largest cryptocurrency by market capitalization as we can observe in the image below. Ripple was designed to address the shortcomings, linked with inteational payment transfers by commercial banks.
The use of Ripple, therefore, serves the purpose of tapping into the benefits of blockchain technology to enable financial institutions to send money across borders, instantly, reliably and for a fraction of a cost.
To extrapolate what XRP achieves via its blockchain system, we could think of the remittance system SWIFT. Ripple is a payment network that is powered by the Ripple payment protocol for the purpose of achieving a payment settlement to exchange an asset (XRP), under a highly secured network, with banks and financial intermediaries as the main actors in the transactions.
As the Ripple team describes it: “This unification of the underlying infrastructure that ties institutions and providers together helps our customers grow their business and enables the world to move money like information moves today—a concept referred to as Inteet of Value.”
Why critics think Ripple is not a cryptocurrency
Ripple clashes with the concept that Bitcoin has embraced from its inception as an asset class that embodies the democratization of finances via its truly public system.
The reasons there has been major tribalism created around Ripple is because it defeats the purpose of being a truly public ledger since there is a private company that controls the supply and mining of the XRP asset.
However, there are many other differences that have resulted in frictions among sectors of the market, not perceiving the Ripple network as fitting into the category of crypto currencies.
Some of the reasons include:
How to buy Ripple cryptocurrency
While there are a number of different user profiles with an interest to acquire the Ripple cryptocurrency, by and large, we can classify them into two different categories.
On one hand, we have banks and financial intermediaries as an end-user buyer looking to take advantage of cheaper inteational transactions through the ripple network.
On the other hand, we have what’s often called in financial jargon ‘speculators’, in other words, individuals whose sole interest is to hold XRP or ripple in order to make a profit in expectation of a higher valuation.
I’d expect the majority of you reading this article to be in this latter category. If so, the safest and most convenient way for someone to get their hands on XRP is via a cryptocurrency exchange. By far, the exchange reporting the largest volume these days is OKEx Korea.
Below is a list of the top exchanges to buy ripple, classified by the total volume transacted.
How to buy Ripple cryptocurrency in the UK
In the UK, XRP is available on a wide range of cryptocurrency exchanges. Some of the most popular include Coinbase, Kraken, Binance, eToro, Uphold, Cryptopay to name a few.
For a full list of the exchanges that as a UK resident you can have access to and a step-by-step guide to buying XRP, you can visit the website Finder.com.
In a nutshell, the first step involves registering for an account with an exchange that allows you to buy XRP. Typically, further information is needed to satisfy Know Your Customer (KYC) requirements.
Once that’s out of the way, it’s time to deposit funds into your account, in this case transfer GBP from your bank, credit card or other method you have access to into your exchange account.
With your GBP now safely in your exchange, since a transaction of XRP/GBP is at times difficult, you need to first exchange your XRP for a popular crypto currency such as Ether (ETH) or Bitcoin (BTC), and then exchange it for XRP by buying the pair XRP/BTC for example.
That’s about it. The above were the basics on how you get your hands on some XRP in the UK.
Best app for Ripple cryptocurrency
As a retailer, once you’ve purchased a certain amount of Ripple, you can keep the cryptocurrency in the exchange wallet, which is not the safest bet as these can suffer hacks. Nonetheless, it’s a practical option many opt for if the intention is to sell the asset within a short-term period.
However, if the time horizon to hold the Ripple cryptocurrency for months or years, you should highly consider an application to store your XRP in a more secure environment. There are many offline wallets out there referred to as cold storage where the Ripple cryptocurrency can be stored without the danger of being so easily stolen.
The best apps to use as a wallet for storing, transferring, receiving and managing your ripple, include the ledger nano S, which would be the equivalent of OKEx Korea in the wallet domain, in other words, it’s become the most popular wallet to store not only ripple but a large range of other crypto currencies. The ledger nano S has the shape of a UBS drive with an attached OLED screen. One of the distinctive characteristics is that the ledger nano S allows you to store an unlimited number of XRP as opposed to many other wallets where the capacity is limited.
Other apps for the Ripple cryptocurrency include the edge wallet, rippex, gatehub, atomic wallet, coinpayments, cryptonator, just to name a few other alteatives. Whichever app you decide to use, make sure that at its core, it offers the following features: data is confidential and secured by a PIN code, stored in an isolated environment hack-free, it is intuitive to use, it can support multiple cryptocurrencies in one wallet for convenience, and malware-proof.
Can you mine Ripple cryptocurrency?
Ripple runs on a Proof-of-Work consensus algorithm (an iterative consensus ledger) and validating servers network, and even if its design is structurally-wise of similar characteristics to that of Bitcoin, it is in the technological layout that it differs as ripple aim to ensure instant, secure and zero-cost financial transactions worldwide.
One of the limitations of Ripple, is that mining is not possible by individuals or mining companies. The sole player that can create XRP are the creators of the crypto currency. Up to this point, roughly 100 billion XRP coins have been made available.
An important peculiarity to remember about the way the XRP functions is that once an XRP has been used for a transaction, it no longer can be used to validate a new transaction. What this means is that XRP would gradually see decreasing supply the more demand that exist to use the ripple network to process transactions, which may see the value appreciate in the process.
However, an important caveat to bear in mind is how the Ripple team manages the supply of ripples into the market. It is thought that about half of the total supply of XRP, about 50 billion of XRP holding is in a cryptographically-secured escrow wallet.
The team has endorsed this practice as a means to contribute to the thriving of the XRP ecosystem by releasing about 1 billion XRP from the escrow wallet every month, aimed at actions such as funding the blockchain products and other strategic plans.
The current status of XRP supply is as follows:
Total XRP held by Ripple – About 7.5 billion
Total XRP distributed – About 43 billion
Total XRP in escrow – About 49.5 billion
It is thought that about 60% of XRP tokens are owned by the Ripple team.
Ripple cryptocurrency to USD
As this article is written, the price of ripple can be found at around $0.20, which is a new 2-year low, as the crypto currency remains pressured by the tsunami of selling seen in Bitcoin from the $14,000 peak to currently breaking the $7,000 level.
Whenever Bitcoin sells off, especially if it occurs with sharp movements as what we are seeing, unless the market is under an ALTs cycle, which refers to the time when all crypto tend to gain value vs BTC, the price of ripple will come under seize by traders wanting to bail from their long positions in XRP as they anticipate they can get a better price once the capitulation is over.
Should the first area of demand highlighted above be fully penetrated, only then we could assume that the sell-side pressure may have further to go until price finds its next fresh area of monthly demand, which won’t come until ripple gets as cheap as $0.05.
Why is Ripple cryptocurrency so cheap?
Ripple’s price is a mere fraction of that of Bitcoin, mainly due to the enormous total supply of XRP (100 billion) vs the limited 21 million Bitcoin that will ever be in existence.
Another critical factor that makes the price of XRP (record high at $3) not as high as Bitcoin (it peaked at $20k in early 2018), is due to the fact that Bitcoin enjoys the first-comer advantage as a disruptor in the crypto currency domain, allowing much broader awareness and popularity.
In microeconomics, the universal law of supply and demand, represented in an economic model via the chart below, implies as the key influencer to settle the price the optimal point of equilibrium where the quantity demanded meets in the curve the quantity supplied.
In this chart, the more that the supply curve moves to the right, in other words, the higher the quantity supplied of a particular asset, in this case XRP, the more downward pressure it will create for price, assuming that the demand remains constant.
This is precisely the reason why people are not willing to pay more than a few cents per XRP these days (around 20 cents as I type), as the supply remains vast (100 billion) but the demand in this case, ever since the peak of early 2018, has collapsed in tandem with the rest of cryptos.
What happened to ripple cryptocurrency – A timeline
If one is interested in the chronicles of the most important feats by the Ripple team, the website crunchbase does an excellent job in putting together in chronological order important events to stay up to date with the actions undertaken by the company to keep growing.
One of the latest news to break out includes the final $20 million investment in MoneyGram, the gigantic global provider of money transfer services, in order to support MoneyGram’s operations in the use of On-Demand Liquidity, Ripple’s product to facilitate instant and cheap transactions.
Is Ripple cryptocurrency a good investment?
To understand if the Ripple cryptocurrency is an investment worth putting money on, one must conduct a thorough due-diligence process that encompasses from its activity on social media to keep growing awareness, the team strength, the partnerships signed, what companies have invested into the Ripple project, is the technology easily replicable, if so what makes them special, does it solve a problem with anticipated higher demand.
An all-time favorite of mine in terms of a website that conducts legit and deep analysis to assist on the decision of putting some of your eggs in the Ripple basket or conclude that the project is not that appealing is www.crunchbase.com, in particular this link relates to Ripple.
As a personal note, I’d say that since the Ripple system appears for all practical purposes to be centralised, many in the cryptocurrency community believe that its current design is doomed to fail as it is absent of the technical characteristics that make other alteatives like Bitcoin more interesting such as censorship resistance, the pre-mining XRP algorithm or the excessive supply of ripples that will ever be in existence, an amount much greater than the 21 million Bitcoin that can ever be minted due to the algorithm restrictions when it first came into existence.
However, the Ripple enterprise has been capable of proving to have the backing of financial capital, combined with some rather successful marketing campaigns. After all, they’ve managed to sign some high-profile business partnerships such as the one with MoneyGram, the second-largest remittances firm worldwide, which saw it purchase a 10% stake in the entity.
The Moneygram partnership, ripple CEO Brad Garlinghouse claimed, is a major milestone as it represents a large-scale use case of a crypto asset.
“This is a big deal. If I were betting now, a year from now the MoneyGram deal will have a more consequential impact on the crypto markets than the Libra white paper.”
Other partnerships the team has been able to secure are included in the infographic below:
There is a case to be made that Ripple is making leeway to build adoption of the XRP token either among businesses or consumers. One then must complement the fundamental outlook that justifies or not a certain valuation with the technical analysis of the chart.
If we look at the price of ripple, it has collapsed by more than 90% from its retail-driven craze days back in late 2017. Most importantly, if we start to ask ourselves, where did the market find value to buy the cryptocurrency in the past, I’ve highlighted a couple of monthly demand areas in the chart where based on past history, it proved to be areas perceived as valuable as the strong departure demonstrates, which communicates an imbalance of demand.
What this means is that if you are able to build the premise that the Ripple team and its native cryptocurrency XRP can pull it off by creating a much broader adoption, the technical picture looks quite constructive from a supply and demand standpoint.
If one aims to join the ripple bandwagon but prefers to be cautious on its approach and build a position for the long run, there is a concept in trading called ‘cost averaging position’, which entails investing equal dollar amounts in the market at regular intervals of price. This strategy guarantees a mathematically favorable average price for your investment.
Hopefully this guide has contributed to your understanding of what Ripple is all about, where to buy it, how to buy it, its prospects down the road, and many other aspects. The intention of this article was not to go on a deep dive into any specific department but rather provide the reader an eagle view of the third most well capitalized cryptocurrency in the market.