This post was originally contributed by Williams Mugwagwa.
You may have heard about Ripple if you have been in crypto long enough. You may have heard arguments for or against it but probably never heard a well-balanced argument that covers both sides of the equation.
This is mainly because of Ripple’s nature. It is polarizing at times, different form bitcoin and its cousins, yet it is a needed cryptocurrency.
Ripple Coin existed long before Bitcoin came onto the picture. This surprises many people. But its success story is intertwined with bitcoin.
And its relationships and partnerships with banks could be considered treasonous. Cryptocurrencies allow you to transact without intermediaries such as banks.
“Long bitcoin, short banks,” bitcoin maximalists say.
On whose side is Ripple Coin on? Does it side with the banks? Or crypto maximalists who advocate for anonymous, faster, low-cost transactions?
Maybe people need to accept that Ripple is a bridge between the two worlds.
What is Ripple Coin?
Ripple, like coins such as bitcoin, is both a protocol and a cryptocurrency. The Ripple network is an open-source protocol specifically built for fast and low-cost transactions and remittance purpose.
The Ripple network has its own native currency known as XRP. The Ripple protocol allows developers to create their own tokens via RippleNet.
The XRP token is widely used to exchange value across the Ripple Network. It is the bridge between different cryptocurrencies or fiat currencies.
The best way to understand Ripple is by studying the current payment rails and their flaws.
According to Ripple, the current payment system suffers from four major setbacks:
- Slow – transactions take 3 – 5 days to settle.
- Expensive – transactions fees are high resulting in financial institutions pocketing $1.6 trillion annually.
- Unreliable – there is a high failure rate
- Unacceptable – there is a need for a better alternative system.
Let’s assume you are in Japan and you want to wire money to someone in South Africa. This takes several days and there are reasons why.
The majority of banks and financial institutions use outdated systems.
These institutions are not connected to the same network, meaning that there is no direct line between financial institutions for sending each other money between accounts.
There is no direct way to send money from a Japanese bank to a South African bank. The Japenese bank is forced to convert the Yen into dollars, send it to a South African bank, who are have to convert the dollars to the local Rand.
This step consists of several intermediaries and conversions, and needless to say that it is expensive.
One way traffic: Ripple solution
Ripple’s solution to the current financial rail is RippleNet, a network that allows people to send “value” across the world as fast as they can send an email.
RippleNet consists of financial institutions such as banks and payment gateways. Instead of going through multiple ‘intermediaries and conversions,’ RippleNet looks for the shortest possible route to send money across the globe.
The Ripple network also allows people to make payments using cryptocurrencies such as bitcoin and still offer a quick and cheaper route.
In a nutshell, Ripple Coin is a bridge currency for both fiat and cryptocurrencies.
A short history of Ripple
The history of Ripple precedes that of bitcoin. OpenCoin, the precursor to Ripple, was established between 2004 and 2005 by Ryan Fugger.
But the story of the Ripple we know today did not start until Jed McCaleb – an internet programmer and founder of eDonkey – convinced an ‘A’ list of investors to invest in Ripple Labs in 2013.
McCaleb built Ripple with the help of Arthur Britto and cryptographer David Schwartz, who now serves as the CTO of the company.
McCaleb later had a major fallout with Ripple Labs management on the direction of the company. The matter resulted in lawsuits. McCaleb left the company and founded Stellar, a competitor of Ripple.
Ripple Labs raised $96 million in several rounds of funding from notable investors between 2013 and 2016. Some of the investors who participated in each funding round include:
Angel investors
Andressen Horowitz, Bitcoin Opportunity Fund, Pantera Capital, Google Ventures, FF Angel LLC, Vast Ventures, Lightspeed Venture Partners, and IDG Capital Partners.
Seed investors
Camp One Ventures, IDG Capital Partners, and Core Innovation Capital
Series ‘A’ investors
Seagate Technology, ChinaRock Capital Management, IDG Capital Partners, Santander Ventures, China Growth Capital, AME Cloud Ventures, Route 66 Ventures, RRE Ventures, Wicklow Capital, Innovation Capital, Venture 51, and Vast Ventures
Series ‘B’ investors
Santander InnoVentures, Standard Chartered, SBI Holdings, Seagate Technologies, SCB Digital Ventures, CME Group, and Accenture
Should you invest in Ripple Coin?
Many people who bought cryptocurrencies were doing so in the hope of making a profit through price appreciation.
XRP has not seen many price swings associated with bitcoin. Some of the reasons that make Ripple a good investment include:
- XRP transactions are fast and can be processed within 4 sec. Bitcoin only supports around 7 transactions per second (TPS).
- Cheaper transactions
- Ripple has partnerships with over 100 major banks including JP Morgan, Bank of America, Barclays, UBS, and more.
The future of Ripple looks bright although it will likely face stiff competition from tech companies such as Facebook or banks such as JP Morgan launching their own digital tokens.
Ripple is currently the third-largest cryptocurrency in the world with a market capitalization of $13.2 billion.
Ripple’s value rose 33,000 percent alone in 2017 according to CoinMarketCap data.
If you had invested in Ripple Coin when it debuted in 2013, you would be more than 5,000 percent richer.
While XRP has not performed well since the beginning of the year, there are reasons that suggest its price could increase in the future.
- Ripple has partnerships with banks and will likely add more in the future.
- It will save banks a lot of money on transaction costs.
Ripple is facing threats
Ripple’s plan to use cryptocurrencies to offer services that traditional banks can’t is under threat from the banking and technology sectors.
JP Morgan, one of the largest banks in the US, announced its inhouse cryptocurrency – JP Coin – in February this year. The cryptocurrency is only reserved for the bank’s corporate clients.
The only thing working in XRP’s favor is that JP Coin is built on a permission-based network and not on an open blockchain network such as Bitcoin.
Ripple CEO Brad Garlinghouse downplayed the threat posed by JP Coin.
“As predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer,”
He tweeted on Valentine’s Day.
As if the threat from JP Coin is not enough, Ripple has to contend with Facebook’s Libra cryptocurrency set to launch in 2020.
Libra has already secured the support of major companies that include Visa, Mastercard, Uber Technologies, Stripe, Coinbase, eBay, Andressen Horowitz, and more.
Why Ripple has to deal with criticism
Ripple, just like most projects in the nascent sector, is not immune to criticism.
- Although Ripple has partnerships with a lot of banks, most of them are only testing it. They use fiat currency and not Ripple’s native token, suggesting that banks are yet to be ‘hooked’ on XRP.
- Ripple can easily freeze or reverse transactions. This goes against the ethos of crypto. A perfect of this is when McCaleb tried to dump his large XRP stake but the transaction was reversed.
- Ripple is considered to be highly centralized as the parent company owns around 60 percent of the token supply.
However, Ripple’s CTO, Schwartz argues that Ripple is not centralized, and in a way, more decentralized than bitcoin.
“Put simply, the XRP Ledger is based on an inherently decentralized, democratic, consensus mechanism — which no one party can control,” wrote Schwartz in a blog post on Aug. 22.
Despite these controversies, the fintech managed to sell XRP tokens worth $251.51 million in Q2 this year.
Ripple dumps $251 million in XRP tokens in Q2 2019. //Source: Ripple
How to buy Ripple coin
There are three steps to buying Ripple.
1. Find a suitable cryptocurrency wallet
The first thing you need to do before buying Ripple Coin or any other cryptocurrency is getting a wallet. This is the same as fueling your car before driving it. The wallet must be compatible with XRP.
There are different types of wallets and each serves as a unique purpose. There are two types of wallets – hot and cold wallets. It has nothing to do with temperature though.
A hot wallet is constantly connected to the internet and easily susceptible to hacks or cyberattacks. A cold wallet – which is not connected to the internet – is the most secure wallet.
The safest way to secure your crypto wealth is to use a hardware wallet. You should use this if you have a large quantity of XRP to store. You can use an online to store digital asset that you want to transact.
2. Choose your exchange
The blessing and curse of crypto traders are that they have a vast number of cryptocurrency exchanges to buy their crypto from.
You can buy Ripple using fiat currency or other large-cap cryptocurrencies such as bitcoin.
There are peer-to-peer (P2P) marketplaces that match buyers and sellers and allow them to set up a meeting and carry out a transaction in person. This is very dangerous and as you don’t know the person you are meeting.
Some of the best and most secure exchanges in the world include:
- Binance
- Huobi Global
- Coinbase
- Kraken
- OKEx
- Bitfinex
- HitBTC
3. Withdraw your Ripple Coin to your wallet
The last thing you should ever do is to store your cryptocurrency on exchanges. These exchanges carry a target on their backs.
Investors lost more than $450 million in the infamous 2014 Mt. Gox while Coincheck lost nearly $530 million in customer funds in January last year. The point is that your digital assets are not safe with these exchanges.
How to buy Ripple in Singapore
- Create an account with an exchange that supports XRP.
- Verify your account
- Deposit SGD or cryptocurrency such as BTC or ETH in your account
- Go to the buy/sell feature and locate your XRP
- Enter the specific amount you want to buy and indicate whether you will use fiat or crypto
- Click ‘Buy’
- Transfer your XRP to your wallet
Where to buy Ripple in Singapore
There are several exchanges in Singapore that allow you to buy XRP. The decision you make depends on your preferred payment method, technical ability, and whether you already own some crypto or not.
First-time crypto buyers would prefer to use exchanges that support XRP purchases using fiat, credit card, PayPal, or wire transfer.
Here is a list of exchanges and their payment methods where you can buy XRP in Singapore.
- Coinmama – credit/debit card, bank transfer
- Binance – cryptocurrency
- Uphold – bank transfer
- Remitano – SGD
- CEO.io – credit card wire transfer
- Changelly – credit card
- HitBTC – credit card, cryptocurrency
- Bitfinex – wire transfer, cryptocurrency
- Coinbase – debit card, wire transfer
- Kraken – wire transfer, cryptocurrency
- Gate.io – cryptocurrency
The future of Ripple
The future of Ripple Coin depends on how it shakes competition from institutions such as Facebook and JP Morgan.
JP Morgan is not much of a threat but Facebook will give the cryptocurrency a good run for its money. However, Facebook’s Libra project is currently facing backlash from policymakers all over the world who see it as a potential threat to global financial stability.
Ripple is so far in good books with authorities and is in favor of regulation in the crypto sector.
“What Ripple is doing is enabling regulated institutions, banks. We partner with some of the largest banks in the world to help them more easily move money around on a cross border basis,”
Said Garlinghouse
Ripple Coin’s journey has so far been interesting and marked by a period of accelerated growth. They have managed to bring on board a number of high profile clients that include major banks in America, Asia, and Europe.
The coin has proven to be a profitable investment over the last years although it hasn’t performed very well since the turn of the year.
Bear in mind that crypto assets have cycles of booms and busts. And this bust could be an opportunity to buy XRP.
Do you think XRP is headed for a bullish run? Let us know in the comments below.
Ripple cannot reverse XRP-transactions. This freeze function is only applicable to IOU’s that are put on the ledger. XRP-transactions cannot be stopped, frozen, reversed etc.