XRP (XRP) is one of the better known cryptocurrencies in the market. It’s also one of the most hyped, and many expect it to give extra ordinary gains in the next crypto Bull Run. However, most of the optimism around XRP (XRP) is tied to its 2017 supernormal gains.
Investors expect the market to give similar gains in the next Bull Run. But what if 2017 was an anomaly? Not a far-fetched idea considering that some major exchanges like Upbit are already being accused of faking volumes (Upbit has vehemently denied the claims). With such a possibility, crypto in 2018 and beyond needs to be judged based on its current standing, and future prospects just like all other financial markets where past results have no bearing on the future.
Using this approach, what are some of the merits of XRP as an investment? One aspect to XRP that makes it a worthy investment is its brand recognition. XRP is one of the most recognized altcoins in the market. On this front, it is only rivalled by Ethereum (ETH) and Litecoin (LTC). Its strong recognition in the market will be instrumental in drawing in investments in the future.
Anyone getting into the market for the 1st time would focus on the most recognized altcoins, if they are looking to invest in something else other than Bitcoin. This does not just apply to retail investors. As institutional money gets more involved in the market, money could potentially concentrate in a few big coins, and kill off volumes in a good portion of the market.
Brand recognition also goes hand-in-hand with the other key merit to XRP, and that’s a higher potential for adoption. XRP prides itself in being fast and low fee, but in reality there are lots of altcoins that have these capabilities. In fact, several of them are way faster and cheaper than XRP. The only edge that XRP has over these altcoins is recognition. This recognition gives it much higher liquidity, and by extension make it more attractive for adoption, especially by institutions looking to conduct transactions in crypto. Low liquidity altcoins may have better technical capabilities than XRP, but they are way more volatile, and would be impractical for large transactions.
So what about the risks? One peculiarity to cryptocurrencies is that investors tend to get attached to their favorite coin, and downplay the risks, or outrightly get aggressive when such risks are brought out. Unfortunately all investments carry risks, and XRP is not exempt from such risks. One of the biggest risks that XRP faces is the control that ripple has over it. The fact that one company controls a majority of it could be a risk to its growth, especially when its core focus is the banking industry.
Banking is heavily regulated, and after 2008, management of systemic risks is a big deal for banks. Shifting their cross-border payments to a settlement currency where a single company has monopoly could be a hard sell. Banks could easily go for XCurrent then settle in fiat or stable coins to avoid such risks. So far a majority of the banks using ripple products are using XCurrent, which means that such a possibility should not be taken as an afterthought. .
On top of that, the fact that a single company controls a majority of the coins means that, if the said company were to bankrupt, XRP’s brand would suffer. It would suffer because XRP is presented as the coin for the banking industry, through ripple. Therefore, if ripple were to fail, XRP’s other use cases would not be strong enough to support its price. It is usually said that XRP can survive without ripple, but the probability of it holding up in the top 10 in such a situation is quite low.
On the basis of the above merits and risks, ripple’s merits are stronger than the risks. Its number two positions guarantees it of strong demand once the market turns bullish. This is purely based on potential volumes that would drive up its demand. As long as Bitcoin (BTC) is drawing in volumes and is rising in price, XRP will draw in relatively higher volumes than most other altcoins, and reward investors. This gives it an element of safety in a highly volatile market. Besides, Ripple is a high growth company and is probably not going away anytime soon, and will continue to play a role in driving up demand for XRP.
That said, it is always good to be cognizant of the potential risks and invest what one can afford to lose. All investments carry risks, and nothing is ever 100% guaranteed.