Everyone seems to know about Bitcoin and Ethereum—but have you heard of Ripple? Ripple is consistently ranked among the top five cryptocurrencies worldwide.
Ripple’s coin is called XRP. Where can you buy XRP? And how does it stack up to other coins?
What is Ripple?
Ripple is a money transfer network. It was primarily designed for the financial services industry. It sought to create a faster and more secure way for banks to facilitate digital money transfers. However, it has also become popular with cryptocurrency investors.
Ripple facilitates transactions on a blockchain network. Whenever you make a transaction on the network, Ripple deducts a small amount of XRP as a transaction fee.
As of mid-2021, the fee comes out to about 0.00001 XRP (about sixty cents). That’s cheaper than a transaction fee at most large banks. And that’s the primary goal of Ripple: facilitate money transfers faster and more affordably.
What is XRP?
XRP is the cryptocurrency that’s used on Ripple’s blockchain. If you’re using Ripple for money transfers, you can purchase XRP to finance your transactions.
You can also purchase XRP for investing. Crypto traders buy and sell XRP in the same way that investors trade individual stocks. Some crypto enthusiasts buy large quantities of XRP, believing that it will someday skyrocket in value (suffice to say, this is a risky investment strategy).
What’s unique about XRP is that it’s more centralized than other cryptocurrencies. There’s no traditional mining.
On other cryptocurrencies, transactions are verified by any number of crypto miners who solve complex mathematical equations. If the equations check out, then the blockchain ledger is accurate. In exchange for lending their computer power, miners are rewarded with coins.
XRP is a pre-mined cryptocurrency. Ripple launched with a predetermined number of coins, and the coins are released periodically.
Ripple owns about 6% of the total coins that have been created. 48% of the coins are held in reserve for scheduled releases. The rest has already been distributed.
You might be wondering: if there’s no XRP mining, then who validates transactions?
Anyone can download the Ripple validation software and verify transactions. But they won’t be rewarded for doing so. Ripple uses a network of “trusted validators” to mine the cryptocurrency. Ripple users are provided with a default list of 35 trusted validators—6 are operated by Ripple.
All validators update their ledgers every 3 to 5 seconds. If there’s a mismatch, they will stop and figure out what’s wrong. This is ultimately a more efficient and secure method of validating transactions. It’s much more efficient than Bitcoin.
When XRP is released, it’s likely given to the trusted validators with whom Ripple is partnered.
The unorthodox mining process is why some crypto enthusiasts don’t consider XRP a true cryptocurrency.
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How To Use XRP & Ripple
you want to use the Ripple money transfer platform, you’ll have to contact Ripple directly. Otherwise, you can buy and sell XRP on a crypto exchange. The most popular crypto exchanges include Coinbase and Binance. Once you’re set up on an exchange, you can place orders to buy or sell XRP, just like how you’d trade individual stocks.
Serious about investing in cryptocurrencies? It’s important to understand that crypto is highly volatile. Price fluctuations can be swift and dramatic, and there’s no clear indication that crypto values will grow steadily over the long term.
Many crypto investors are active traders who keep a close eye on the market, looking for just the right time to buy and sell. If you’re unsure how to place stop orders or limit orders, you might want to try your hand at individual stocks before tackling crypto.
Are you interested in mining? Since XRP is a pre-mined cryptocurrency, you can’t earn XRP through traditional mining.
However, you can mine other cryptocurrencies, earn coins, and exchange those coins for XRP. XRP can be exchanged with many other popular cryptocurrencies.
Pros of Ripple
Ripple has several advantages over other cryptocurrencies:
Cost-Efficiency: Ripple is a cost-effective way to transfer money. Transfer fees are much lower than at banks or other large financial institutions, especially if you’ll have a higher volume of transactions.
Fast and Secure: Because of the blockchain mechanism, Ripple is a much faster way to transfer money. While standard bank transfers may take 3 to 5 days, Ripple transfers may be completed in just seconds. Plus, Ripple has a more secure protocol for validating transactions. It’s a safer, more efficient protocol than traditional coin mining.
No Mining Pools: One of the problems with crypto mining is the presence of “mining pools.” A mining pool is a dedicated collection of computers that are built to validate transactions. With their combined computing power, mining pools usually solve equations faster than lone miners and earn the coin reward. Mining pools consume lots of energy, and they’re not fair to solo miners using a single computer. XRP is a pre-mined cryptocurrency, so there are no mining pools to speak of.
Enterprise-Optimized: Ripple was originally designed for the financial services industry and is built to handle transactions by large financial institutions.
Cons of Ripple
Ripple has major drawbacks, including:
More Centralization: Ripple uses “trusted validators” to verify transactions and maintain the integrity of the blockchain. There’s no incentive for mining, which means fewer people running security checks on the blockchain. That could lead to greater security risks.
Pre-Mining: Ripple uses a pre-mining protocol in which it periodically releases a small amount of XRP at set intervals. Some investors fear that Ripple will release too much XRP at any one time and dilute the value of the cryptocurrency. Ripple has disputed the likelihood of that happening and has said that its release schedule will not impact the value.
Volatility: Like all other cryptocurrencies, XRP is highly volatile. The price may skyrocket or plummet with very little warning, so it’s considered a high-risk investment. Before investing in XRP, consider building a diverse investment portfolio with low-risk and medium-risk investments. The smallest percentage of your investment funds should go to high-risk investments, like cryptocurrency.
Legal Battles: Ripple has been caught up in a legal battle with the SEC (more on that in the next section). Like all other cryptocurrencies, XRP faces ongoing regulation, debate, and litigation from government authorities.
Where To Buy XRP in 2021
As of July 2021, you cannot buy XRP in the United States. The SEC filed a lawsuit against Ripple in December 2020, arguing that XRP is an unregistered security.
Following the lawsuit, XRP was suspended from all major crypto exchanges in the United States, including Coinbase, Binance, and Kraken.
You may be able to buy and sell XRP if you live outside of the United States.
How To Buy XRP on Kraken
If you live outside of the United States, you can still purchase XRP on Kraken. Kraken is one of the leading crypto platforms that’s geared toward advanced traders.
Create an account on Kraken and then link your bank account. Then you can buy or sell XRP.
How To Buy XRP on Binance
Binance is another popular crypto platform. While XRP has been delisted on the US version (Binance.US), it’s still available for trading on some international versions.
You’ll create an account on Binance and link your bank account, just like with Kraken or Coinbase. Then you can start trading.
How To Buy XRP With Bitcoin
In countries where you can legally trade XRP, you may be able to exchange Bitcoin for XRP. You can purchase Bitcoin outright, or you can earn Bitcoin through mining.
Most crypto platforms will give you the option to exchange Bitcoin for a proportional amount of XRP.
If you’re trying to figure out where to buy XRP in 2021, you’ll have to look outside of the United States—XRP has been delisted from most major crypto platforms in America due to ongoing litigation by the SEC. XRP is the cryptocurrency for Ripple, a blockchain-based money transfer platform for the financial services industry. XRP is a unique cryptocurrency that’s more centralized and features a pre-mining validation protocol. It carries much of the same risk that other cryptocurrencies do: volatility and government regulations.
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The information presented is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing provided shall constitute financial, tax, legal, or accounting advice or individually tailored investment advice. This information is for educational purposes only.