Ripple (XRP) is a cryptocurrency often compared with Bitcoin. After all, they do have a few things in common–both have gained reputations as large-market cap networks with potential to be adopted by the financial industry.
However, there is one key difference between Bitcoin and Ripple: Ripple is not actually based on blockchain technology. Instead, Ripple’s underlying technology is a similar kind of consensus-based distributed ledger.
Ripple’s ledger uses a HashTree to summarize groups of transaction data into a single value. That value is then broadcast across validating servers for confirmation. Ripple’s creators argue that this kind of consensus makes Ripple’s products (XRP, the RippleNet, xCurrent, xRapid, and xVia) well-suited for enterprise.
At press time, Ripple was the third largest crypto project by market cap. Even with the months of industry-wide market cap doldrums, Ripple is among the most popular coins on leading exchanges and vendors, such as eToro. In this article we will outline certain factors to consider when purchasing Ripple.
Ripple’s Technological Basis
Along with enterprise adoption, Ripple Labs is focused on building networks for sending and receiving remittances (payments across borders.)
Before Ripple Labs, the SWIFT international payment protocol (used by banks to send intranational and international transactions) basically had no viable competitors. However, many argue that Ripple and could render SWIFT obsolete.
RippleNet, the network underlying XRP, is capable of instantaneously transferring money across the globe. As such, it has been adopted by a growing number of financial institutions, Santander and Moneygram among them.
It is important to note that although these institutions have adopted the RippleNet, they don’t actually use XRP in their transactions. Still, Ripple’s robust list of partnerships is a testament to the technology of the entire Ripple ecosystem.
Cultivating Media Interest
Ripple’s team of finance, technology, and fintech experts has demonstrated their belief that a focus on partnerships and customer acquisition is a vital route for emerging technology companies to get their feet off the ground. Ripple currently has more than 75 clients who actively use the RippleNet.
In addition to establishing a customer-base, Ripple has used strategic partnerships to create a certain ‘hype’. While this hype has evolved into organic press, Ripple is also putting much effort into building its media presence and coverage.
In the cryptocurrency world, press is extremely important: there is almost a measurable correlation between the amount of coverage a particular cryptocurrency gets and its valuation. Therefore, a powerful positive media presence is very important to a coin’s future.
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South Korean Ripple Holders Have a Large Influence Over XRP…
The three biggest Korean crypto exchanges make up more than 50 percent of the trade in XRP every day. This became apparent on January 8th, 2018, when CoinMarketCap abruptly (and accidentally) removed Korean exchanges from its pricing statistics, causing $200 million dollars in XRP to temporarily vanish.
Just four days earlier, on January 4th, 2018m XRP hit its all-time high of $3.84. On that very day, Bithumb, the largest South Korean cryptocurrency exchange, showed XRP levels of trade at about $4.47.
This made clear that a roughly 16.5 percent premium exists on the South Korean exchanges.
However, time has shown that this premium may have been a temporary effect. Since January 4th, the price difference in XRP on South Korean exchanges compared to other exchanges listed on CoinMarketCap has been whittled down to $0.01 (at press time.)
…And As Such, South Korean Government Regulations on Crypto Have a Similar Effect
In recent times, South Korean banks have tightened the regulatory belt when it comes to cryptocurrency.
Earlier this year, they announced that traders and exchanges were under threat of having accounts frozen if they did not comply with the country’s anti-money laundering regulations. This would result in facing not being able to move their national currencies into crypto trading accounts situated in South Korea.
Those changes evidently curb the flow of people and money moving into the crypto markets. Because so much Ripple was (and ostensibly is) held in South Korea, the dampening effect of regulations on the markets had a disproportionate effect on the price of XRP.
The Future of Ripple
The cryptocurrency markets at large remain at a plateau. With a quickly-changing global regulatory climate, the entire industry seems to be ‘on hold.’
Ripple is not an exception of this trend. While the price of XRP has fluctuated to some degree over the past several months, XRP sits close to where it did in March.
If Ripple can continue to build relationships with financial institutions and continue its strong relationship with the media, it may just have a fighting chance at surviving in the long-term. As always, however, the future has not been written yet.
All trading involves risk. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. This content is for educational purposes only and is not investment advice. Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.