XRP: Not Exactly What You Think It Is

Some people think Ripple’s XRP coins will change the world and with a market cap of just over twenty-two billion, Ripple is the third largest cryptocurrency at this time. Ripple also performed magnificently in 2017, having come out at the end of that year with a huge performance, closing the year with a powerful 36,000 percent return, and for a limited time, taking over the number two spot in terms of market cap.

So why isn’t Ripple the cryptocurrency that’s going to take the world by storm and replace all the centralized money to become the first world currency?  Well, to be honest, that was never Ripple’s goal and the company currently has not plans to take it down that path.

There are some very significant differences between XRP and other cryptocurrencies.  When you buy other coins you are also buying the company behind them, so when you buy BTC coins you are buying into the Bitcoin Company and making the bet that the company, and the coins, will increase in value over time.  But this isn’t the way it works with Ripple.

Opencoin, is the name Ripple first used when the startup began its operations in 2012, and then changed to its current name three years later.  They are based in San Francisco, and have around one hundred and fifty people working their jobs to keep the company sound. Their primary mission isn’t putting their coins on the market for everyone to buy, but instead are working at using blockchain technology to produce convenient banking software that allows banks to transfer money internationally.

Ripple sells something called xCurrent, xRapid, and xVia, and all three are designed to further the banking industry, which means that their product, and their company, are not really working towards de-centralization.  The flagship of Ripples product line is xCurrent, which allows banks to move money across international borders, and it uses Ripples blockchain to make this happen.  The software saves a great deal of time and money for banks who take advantage of it, and it isn’t risky for them to use as it doesn’t change their workflow in any significant way.  The product doesn’t use XRP, which means it isn’t volatile, which eliminated possible price fluctuation during transfers.

The next product they sell is xRapid, and it is designed to bolster liquidity when banks trade in emerging markets. This is the product that uses the XRP token, and banks like using it because it allows them to put the mountains of money they have to work, but this is risky due to the volatile nature of the coins it uses to move capitol.

The last product they sell is xVia, and this one is similar to xCurrent in many ways, and allows people to transfer money through banks.  This product also does not use XRP, and if it becomes as big as xCurrent, that will mean a very significant portion of Ripples business will have absolutely nothing to do with cryptocurrency.

Ripple the company is partnered up with hundreds of banks, which is good for the company, but none of them use the XRP token to conduct their money transfer services, so what value should the XRP token represent if hardly anyone is using it and it has almost no purpose?

Many people see Ripple succeeding in banking, which they are, but this is the company Ripple and not the xRapid product that represents the XRP token. Don’t be confused about this and purchase the XRP token thinking it might beat out Bitcoin or replace centralized currencies. The possibility of a correction happening soon is entirely likely, and for the investor this spells trouble.

Ripple would like to replace SWIFT, which is the society that currently moves all the money between banks across the world.  SWIFT, who earned only $31 million in 2016 sending vast sums of money through their network, is the focus of Ripple at this time.  As you can see this is not the business opportunity XRP would need to become a world currency.

Ripple also has competition in the marketplace for software that can move money around the world, and their main competitor is R3, who has software that completes same operations as Ripple.  The difference is, and probably why no one has really heard of them outside of the banking community, is because they don’t have a coin to offer.  But they are in seventy of the world’s biggest banks right now.

SWIFT, on the other hand, works with over eleven thousand banking entities, and puts more than 2600 people to work every day moving money around the globe.  Obviously, if they wanted to, SWIFT could develop their own blockchain, and use its business connections to roll it out.  If they can do this faster than Ripple can increase their user field, that would spell out bad news for Ripple the company.

Ripple owns about 60% of their XRP coins, and has locked up more than 55 billion of them.  If you are an investor, this should worry you a little, because you now only have the word of Ripple that any coins will be released for purchase soon.  They have promised that they will put a billion of these coins on the market for 55 months in a row, and they obviously stand to make significant gains by doing this.  However, will that translate into money for investors?

The possibility of regulation could also spell problems for Ripple, and they face the very same problems as the early coins that failed because they were connected to centralized banks. Even if xRapid is adopted in a big way by banks, the fact that the coin’s value is increased only through the holding of those coins until the value increases is a problem for cryptocurrency investors.  Banks will not want to hold these coins as they can’t handle the volatility, and this would cause the market cap to decrease significantly.

So, it seems that there are deep rooted issues with XRP that investors should consider.  A lot of things would have to go right for XRP to become anything truly important. Ripple is a great company with great products that can vault the company even higher without the help of cryptocurrency. While that might be significant for the company, it isn’t necessarily anything the average investor in XRP wants to hear.  Of course, that is entirely up to you, the investor.