The Independent Republic

Why Ripple Will Continue to Be a Relatively Safe Investment in Cryptocurrency

Ripple (XRP)–In the midst of a downturn in cryptomarkets to start the new year, Ripple has managed to avoid the erratic price drops that have plagued most of the market. While Ripple has experienced a steady erosion in price from the all-time high of 3.80 USD, it has been buoyed by news lingering on the horizon. Coinsquare, a popular Canadian based exchange, has already committed to XRP listing. The MoneyGram announcement, while significant enough to raise the price back to the 2.00 USD range, is likely just the first of several companies to adopt XRP. And of course, the possibility of a Coinbase addition in the near future will keep investors wary of missing out on substantial gains.

Here are a few reasons why XRP pricing will continue to hold steady over the coming months:

Real-World Usability

MoneyGram. Arrington XRP Capital. Cuallix. American Express. Western Union or another big name coming soon to that list. The price of XRP is being propped up by the prospect of being a pervasive feature in the world of fintech. Imagine if Ripple, with XRP held as liquidity, became the prominent technology for money transfers by the year 2020. Who wants to sell a coin now at $2 that could easily be worth $10 a year from now? XRP’s price is still undervalued for investors who plan to go long or enthusiasts who believe in Ripple as the future of money transfer.

Thus far, few other currencies have managed the same level of adoption and exposure as XRP. Even Bitcoin has succumbed to a failure to gain momentum in a usable way. The price of BTC has stagnated primarily for two reasons: uncertainty in the marketplace and a lack of usability. The first was created by the sudden rise of Bitcoin Cash and the extensive marketing campaign of Roger Ver and other supporters. Bitcoin Cash, a hard fork of BTC created in August 2017 to improve the feasibility of BTC scaling, has created enough uncertainty in the marketplace to make traders and the general public wary. Crypto is confusing enough. Imagine being a newcomer, having heard all about the wonderful things of Bitcoin from co-workers and friends, and seeing Bitcoin and Bitcoin Cash. Which do you buy? Why is one priced roughly 5x the value of the other? Then you find out all those who were holding Bitcoin at some point received an equal amount of BCash. Now, not only does BTC begin to lose the appeal of scarcity or lack of inflation, it starts to feel more like a ponzi scheme. Not only do early adopters benefit from the rapid appreciation of Bitcoin over the past year, but they also have a stake in Bitcoin Cash. Couple that with Roger Ver appearing on mainstream media declaring that BCash is Bitcoin and that Bitcoin Core is dead and you effectively have a market that is paralyzed with uncertainty.

The second major factor in the stalling of Bitcoin’s price is the lack of usability. The only value of a currency is what people ascribe to it. Bitcoin’s price has been predicated upon the speculation of use as a long-term storage of value. The process for BTC to be used as a currency exists. Anyone can send and receive BTC and participate in blockchain transactions. But the ability for widespread market adoption is just not there, yet. Unless you hold a massive amount of BTC, high transaction fees will continue to cripple the market. Most people are holding Bitcoin with the hope that it will be exponentially more valuable in the future. If the average person would struggle to afford even a fraction of a single Bitcoin, then what incentive do they have to spend it now, when prices are theoretically well below their target price, and pay an exorbitant fee? Bitcoin has the opportunity to address scaling issues and reclaim its position as a dominant “currency,” but until then it largely falls into the category of an asset, like gold, that is best for storing wealth. Now that Bitcoin is becoming more mainstream, the conversation dominating the public mind is not “What is Bitcoin?”, but “How do I use it?” That’s no longer a question BTC enthusiasts can easily answer. Sure, you can send and receive BTC like any other currency, but only with the caveat of high fees and slow transaction times. This alone is creating a more toxic atmosphere for the future of Bitcoin than any claim of ponzi scheme of the uncertainty of BCash.

In the end, Bitcoin will figure out its scaling issues and return to a state of usable digital currency. However, in the meantime, a door has been opened for altcoins to eat away at the dominance of BTC market share with the promise and demonstration of real-world usability.

Separation from Bitcoin and Lack of Competition

Most cryptocurrency news revolves around comparison to Bitcoin. For good reason. Bitcoin was the earliest cryptocurrency in its modern conception, and holds the bulk of the market share by a wide margin. However, one of the true benefits of Ripple is how it is able to establish an identity apart from Bitcoin. Many of the top 10 coins like BCash and Litecoin are forks of Bitcoin that exist in direct competition to the parent currency. While Charlie Lee, creator of Litecoin, has long positioned LTC as the “silver” to Bitcoin’s gold, even that competitive relationship will come to a head if cryptocurrencies are to become the dominant form of payment. XRP is something different. The Ripple technology was built as a way to improve the transaction speed and fees associated with large bank-to-bank transfers. While XRP does offer open-source usability and blockchain security, its function as a currency is fundamentally different from BTC. That being said, Ripple does have the potential to challenge Bitcoin as a dominant currency in person-to-person or person-to-business transactions. A digital currency needs to be fast and cheap to transact. Cryptocurrencies have the added benefit of security and anonymity through a consensus ledger (blockchain). Because of the focus on bank transactions, Ripple has been seeking to build upon the scaling issues of Bitcoin since day one. We still don’t know how Litecoin and BCash would scale if given the same load of transactions that BTC is currently bogged down with. The same could be said for Ripple, but at present, the technology of XRP offers some of the cheapest and fastest transactions of all crypto. We could see internet commerce sites and small business begin adopting Ripple as a way to engage cryptocurrency buyers, just as what occurred with Bitcoin in the past prior to the high fees.

Either way, it’s possible for a trader and crypto-enthusiast to build positions in both Bitcoin and Ripple (or other BTC derivatives) without worrying that the two will produce a zero sum game. In the long-run, that may not be the case. The coming year will reveal a lot about the direction of the cryptomarketplace and whether Bitcoin will retain its dominance. Lightning Network or some similar improvement may finally provide the solution to Bitcoin’s congested network and return it to a usable form of digital currency. For now, XRP exists in a sphere with few other direct competitors (mainly XLM). You can believe in the revolutionary effects of Bitcoin while still supporting Ripple as a value proposition.

Greater Adoption Through Exchanges & XRP Pairing

It’s hard to talk about the price of XRP over the last several weeks without addressing the elephant in the room: Coinbase. The all-time high of 3.80 USD occurred just prior to Brian Armstrong’s announcement that Coinbase would not be pursuing more altcoins at this time. Subsequently, we have seen a steady pullback from that high to levels more stable (particularly in terms of satoshi/XRP pairing) for the coin’s projected value. The Coinbase announcement has put a pause on the rampant speculation into XRP pricing, for now, but it’s not a definitive no to Ripple eventually making its way to the exchange. Brian Armstrong, CEO of Coinbase, is on record saying his company would be adding many more altcoins in 2018. Ripple is the highest market cap and volume cryptocurrency currently not available to Coinbase users. While it may not be as soon as some originally expected, the addition still seems likely. Ripple is the most obvious addition, as it offers both technology and a price point that differs vastly from the current listings. Bitcoin Cash, the most recent addition to Coinbase’s collection, benefited from a near doubling in value. While it’s price has settled to lower levels since the listing, we can assume that a similar appreciation of 50% (or more) will happen to Ripple. Until the Coinbase listing occurs, speculation and profit-seeking will continue to drive the price of Ripple up despite an otherwise downturn in crypto markets. Think of it this way: Coinbase has over 13 million accounts. Given the newcomer vibe, easy-to-use app and credit/ACH purchasing power, we can assume a large portion of Coinbase users are not active on more complex exchanges which currently offer Ripple. The end result is millions of new adopters of XRP, none of which have had the chance to purchase high-supply, low-priced coins through their current exchange. Ripple offers great value as a long-term currency, but there is a lot of speculation and excitement building as buyers hedge on the price increase with Coinbase.

Even without Coinbase, there are other exchanges that could further the adoption of XRP. While many U.S. customers rely upon the app-friendly Coinbase to transact in crypto, Canadian-based competitor Coinsquare has specifically stated it will be adding XRP. There is also a chance popular exchanges such as a Bittrex and Binance add XRP pairings to complement BTC and ETH. The end result would be another currency for investors to hedge against their foray into altcoins. We recently saw how Ethereum was able to benefit from the stagnating price of Bitcoin: crypto investors, flush with profits from the altcoin boom, were wary to cash in on Bitcoin amidst a downturn in price. Ethereum, with its steady appreciation from 700 USD, has gone on a price run in the last two weeks as investors park there money in ETH as opposed to the traditional route through BTC. Ripple could receive a similar benefit, with the added effect that it offers long-term price stability. It’s hard to imagine Ripple mooning in price at this point (and suffer from the subsequent price falls), at least within a short time-frame, which makes it an attractive pairing for investors. XRP also offers negligible transaction fees and speedy transfer times, a perfect match for the back-end of exchanges and investors looking to move their money to multiple wallets.

XRP: Long Term Appreciation, Short Term Stability

The flooding of crypto dollars into Ripple is an attempt by the market to invest in future technology. We will continue to see a surge in value for other cryptos, Ripple being the current darling, that are able to demonstrate real-world application and the potential for disruption. Ripple doesn’t solve all the problems of the world, but it has positioned itself to take on Swift and supplant the largest provider of bank-to-bank transactions. Couple that with adoption by financial services like American Express, $100 million hedge funds and household-name money transfer companies, and you have the conditions for a cryptocurrency that offers near-term appreciation and long-term value.