XRP | Fundamental Analysis

Bitcoin has recently made headlines again with a price surge exceeding 10% this month. While it often captures the spotlight, XRP is another cryptocurrency that has been around for years and offers a unique opportunity in the crypto landscape. XRP, the operational token of RippleNet, enables fast, low-cost cross-border money transfers, making it distinct from Bitcoin.

Trading at just over $0.50, XRP remains significantly below its peak price of $2.70. This price point raises the question of whether it’s a good entry for potential investors.

XRP stands apart in the cryptocurrency world as it’s primarily designed for institutional use rather than general public adoption. While anyone can purchase XRP, its main purpose lies in streamlining payments and transactions among banks and financial institutions.

Launched in 2012, XRP was developed by a team aiming to tackle issues they saw in Bitcoin, such as inefficiency, slow transaction speeds, high fees, and environmental impact. XRP is specifically designed to address these problems.

XRP offers a speed advantage, particularly for the banks it targets. Most banks currently rely on the SWIFT system, which can take days for cross-border transactions. While Bitcoin transactions may take 10 minutes or more, XRP transactions are completed in a matter of seconds, making it highly efficient for quick transfers.

Transaction fees are another area where XRP shines. While Bitcoin fees can exceed $20 or $30 depending on market demand, typical RippleNet transactions cost only a fraction of a cent. For large-scale international transfers between banks, RippleNet can reduce transaction costs by roughly 60% compared to SWIFT.

In terms of scalability, RippleNet is also capable of processing up to 1,500 transactions per second, far exceeding Bitcoin’s capacity, with the potential for even more through future optimization.

Environmental sustainability is a final strength. Bitcoin’s energy consumption has drawn significant criticism, as its network uses as much power as entire countries. RippleNet, by contrast, uses the equivalent power of only about 50 households per year, making it much more environmentally friendly.

However, XRP is not without its challenges. A significant concern is its perceived centralization. Although Ripple Labs, the company that grew out of XRP’s development team, operates independently, it still holds a substantial influence over XRP, including nearly $50 billion in escrow. This level of control is viewed by some in the crypto community as contrary to the principle of decentralization.

Additionally, Ripple Labs has faced a legal battle with the SEC for over four years. The SEC has argued that XRP is effectively security and that Ripple Labs raised funds illegally. Although the case has largely gone in Ripple’s favor, ongoing appeals keep the outcome uncertain.

One more issue complicates XRP’s future value: banks that use RippleNet’s payment network can do so without utilizing XRP itself, weakening the coin’s potential demand. While Ripple’s technology has gained some traction within the banking sector, this has not translated into increased use of the XRP token, casting doubt on its long-term growth potential.

In sum, while XRP offers benefits in terms of speed, cost-efficiency, and sustainability, it is not the only cryptocurrency with these features. Despite RippleNet’s success in financial circles, the anticipated widespread use of XRP remains unlikely. For investors, there may be more promising opportunities elsewhere in the crypto market, with assets like Bitcoin presenting a more compelling case for long-term value.