Beyond Banking; Crypto And The XRP Effect

Why a cryptocurrency is necessary

That’s what you’re wondering now, isn’t it? Why can’t the ledger work sans cryptocurrency? Well, the truth is, Ripple’s cryptocurrency, abbreviated as XRP, isn’t necessary. But it’s useful and good to have.

As mentioned before, most cryptocurrencies these days exist just for the sake of existing (Bitcoin being one of them, by the way.) XRP, however, has a very important role to play in the Ripple network: Allowing entities to transfer each other value regardless of currency.

As we mentioned before, currency exchanges are part of the problem with wire transfers. If you want to send, say, Mexican Peso to someone in Russia, the process includes converting the money to USD at first, moving it around the world as USD, and then converting it to Rubbles once it reaches Russia.

It’s a double exchange (or triple or quadruple – banks will perform exchanges as they see fit) and it comes at a cost, both in time and commission money.

Is Ripple sure to appreciate in value?

If anyone ever finds an investment that’s 100% sure and not a scam, it would be nice of them to share it with us. Because as far as we know, there’s no such thing as a safe investment.

However, while there’s no such thing as a safe investment, there are investments that are more (or less) likely to offer decent or good returns. 

We can’t really tell where the price of a cryptocurrency or stock will go, but we can make educated guesses based on how it has been doing so far, and the buzz around the market it is in.

With Ripple and its XRP token, it’s difficult to imagine a situation where it would become worthless. If it were a startup project barely getting started, and with more dreams than accomplishments, it would be wise to doubt it. After all, many entrepreneurs will promise you everything and deliver nothing when their dreams happen to be too big and the market overestimated.

Ripple, however, is already implemented, although not done and dusted. It already has users, and many of these users are large, international institutions of the kind that most people could never convince to back their projects. 

This means that the company, and its blockchain token, aren’t likely to go away. In fact, since the company behind Ripple has many services it offers to banking beyond the blockchain and XRP, only a catastrophe would likely bring it down entirely.

This means XRP is likely to appreciate over time since cryptocurrency prices more often than not reflect the public trust in a blockchain. However, it’s still good to be cautious.

Conclusion

XRP’s price will generally depend on how many institutions adopt it as their go-to token when sending or receiving money over Ripple, which implies they’ll prefer it to IOU tokens.

At the moment, it isn’t clear if that will happen. Many financial institutions do use XRP, but the market is divided between those that back the cryptocurrency and those who would rather use IOU. Logic shows that as the crypto market settles, more banks might migrate to XRP, but that’s far from a sure bet.

Still, it’s unlikely that banks will just stop using XRP abruptly either, so even if the currency dies it’s likely to have ample warning.