With the resurgence of bitcoin’s price in early 2019, interest has slowly come back to cryptocurrencies with the total market capacity growing from 120 to 262 billion since January. Out of the top three largest cryptocurrencies, Ripple is by far the cheapest. At the point of writing, Ripple has seen a retracement to below thirty cents. Compare that with the price of Bitcoin or Ethereum, approximately $10,000 and $180 respectively, you can see why people might be attracted to the idea of buying Ripple. For a small amount of capital, one can accumulate a lot more XRP.
However, how does one buy Ripple or identify the best trading platform?
Entering the cryptocurrency market is not an intuitive process. The lack of infrastructure and history creates a steep learning curve when it comes to participating in digital assets. Today we shall go into the best practices when it comes to investing in Ripple as well as details into the cryptocurrency project itself.
What Is Ripple (XRP)?
More commonly known as “XRP”, Ripple is pre-mined with a fixed supply of 100 billion XRP tokens. This cryptocurrency has six years of trading history, first appearing on the market on the fifth of August 2013 at approximately $0.005. Since then, it has experienced tremendous growth reaching $3.84 on the fourth of January, 2018. That’s an ROI of 768 times! With numbers like these, it is easy to see why this cryptocurrency is popular among speculators.
Before we start getting ahead of ourselves, let’s first understand what Ripple does and its origins. It’s always wise to know more before you start asking, “Where can I buy Ripple?”
Released by co-founders Chris Larson and Jed McCaleb, Ripple was first known as Opencoin before changing its name to Ripple Labs in 2013. The project’s purpose is to solve the inefficiencies with current banking services, focusing on the process of fund transfer across borders and currencies. As such, the project’s target markets are financial institutions such as banks and payment providers. These clients are the key to Ripple’s success as worldwide adoption requires the existing banking infrastructure to accept Ripple’s blockchain solution to improve their efficiency.
Their secondary target audience is common end-users who wish to transfer funds without hefty fees and a long waiting period. The current banking and remittance system can take up to 5 working days to process a transfer of funds!
In an efficient market, an increase in demand for a fixed supply of items will see the price of that item increase. Therefore, adoption by end-users and acceptance from financial institutions will result in more buying of ripple for utility purposes. This demand will, in theory, drive up the price of the cryptocurrencies.
Ripple’s Suite Of Solutions
Ripple proposes to solve the current problem statement with three core components. These are Xrapid, Xcurrent, and Xvia, with each component servicing the need of its two core target audiences, network users, and network members.
Network users are end-users consisting of corporations, SMEs, small banks, and payment providers who only send payments. Network members, on the other hand, are big banks and payment providers who form the foundation of the network as they process payment and source for liquidity.
Built on inter ledger protocol to connect different payment networks, Xcurrent is the component by which network members can more efficiently process payments and with greater certainty. It does this by providing real-time settlement and pre-validated transactions to eliminate failure. Among the entities wired into Ripple’s network, there is a pre-disclosure of information which enables atomic settlement; a process where transactions will either settle instantly or not at all. Besides, network members can attach rich data such as invoices, payment status, FX rates, and compliance requirements when sending transactions, thus enabling two-way communication to connected Ripple network’s members.
As a result, all network members within the Ripple network can perform operations with each other more efficiently through speed in both communication and data transfer. This process gives Ripple an advantage over other blockchains using proof of work, as they would take a long time to validate blocks of transaction.
To solve the issue of liquidity, they developed Xrapid as a means for network members to source for liquidity through digital assets. Since they can source for liquidity on demand, it lowers the liquidity cost.
Lastly, Xvia is the final component that allows different entities to connect to the Ripple network. This final component is the standard interface to send global payments, which eliminate the need for multiple integrations to the different payment network.
With these three aspects, Ripple is striving forward to implement its value proposition.
While the solutions provided are ground-breaking, Ripple met criticisms over the years. These critics can spread fear, uncertainty, and doubt for individuals who wish to buy Ripple. Therefore, before you start investing in Ripple, make sure you understand where the major concerns are coming from.
Ripple Is Centralized
Its community decentralized and adapted most cryptocurrency projects. This allows the blockchain technology to grow according to the market end-users needs while giving control back to the people. Bitcoin is the most notable of these decentralized projects. By being centralized, Ripple goes against the general ideology of blockchain, which traditionally preaches decentralization. Centralization and owned by a company would also mean that the management and regulatory bodies of Ripple’s network can shut it down. They cannot switch off easily a decentralized network.
Ripple’s Supply Heavily Concentrates Within A Few Entities
Jeb McCaleb, who left Ripple, holds approximately 7% of the total supply, while 55% of the total supply is locked in an escrow. With a high control oversupply, the management has a strong influence on XRP’s price. They can dump the tokens on the market. This will pose a serious problem for holders of XRP tokens.
Risk Of Blockchain Without A Token
Banks can bypass Ripple by creating their blockchain. This will render the XRP tokens useless.
Despite these long-standing criticisms, Ripple has endured throughout the years. We shall let you come to your conclusion on the fundamentals of XRP. For now, we will move on to the places to buy Ripple and how best to secure your investments in Ripple.
Best Place To Buy Ripple
Being one of the top three largest cryptocurrencies by market cap, Ripple is available for purchase at most cryptocurrency exchanges! This accessibility makes buying and investing in Ripple rather easy. However, with so many access points, how can you determine where to buy Ripple? What are the criteria’s you should look out for?
In the following sections, we will go through exchanges and commonly encountered fees and storage.
Cryptocurrency exchanges have two types. First is fiat to crypto exchanges which allows you to buy directly with cash. Second is crypto to crypto which exchanges cryptocurrencies for other crypto tokens. There is another type of exchange called DEX (decentralized exchange). It allows peer to peer trading without a central authority, but we will not be covering that here. We will only discuss the common access points to buy Ripple.
Fiat to crypto exchange is probably the first place to buy ripple for newcomers. It allows an individual to buy Ripple with USD or other currencies. Examples of these are Coinhako and Coinbase. These exchanges will require you to set up a payment gateway to deposit funds before you can start trading. To elaborate this further, we shall use Coinhako as an example. Before you can buy Ripple on Coinhako, you will need to set up a payment gateway with Xfers. Xfers will be linked with your bank account to deposit fiat. Once there is fiat in your payment gateway (Xfers), Coinhako will allow an API link to Xfers so that you can start using the deposited fiat.
Accounts Needed For Exchanges
- Bank account
- Payment gateway account (Xfers)
- Coinhako account
Different countries will have their own fiat to crypto exchanges, but the process is almost always symmetrical.
Crypto to crypto exchange allows you to use a major cryptocurrency or stable coin to trade for other cryptocurrencies like Binance, Bittrex, and Kucoin. Major cryptocurrencies include Bitcoin and Ethereum, while stable coins are Tether or Dai, for example. When you wish to buy Ripple in crypto to crypto exchange, you will have to first choose from the market the cryptocurrency you wish to trade for Ripple.
Coinbase is notorious for its trading fees, which could range from a flat fee of $2.99 or 1.49% of the transaction. However, the accessibility to these exchanges will depend on your region’s regulation. If Coinbase is the only exchange you have access to for your initial venture into the cryptocurrency market, there is little choice if you want to buy Ripple.
Typically, fiat to crypto exchanges has higher fees due to their accessibility and lower learning curve. Crypto to crypto exchanges such as Binance or Bittrex tends to have lower fees that are under 1%.
Thus, regarding the best place to buy Ripple, look for the exchange available in your region that has a reputable history and the lowest fees.
What To Use To Buy Ripple?
That would depend entirely on what funds you have on hand and what you are willing to let go. If you have Bitcoin, then you can use crypto to crypto exchange. If this is your first time buying any cryptocurrency, then you will have to buy Ripple from fiat to crypto exchange.
Now that you have selected which type of exchange you are going to buy Ripple from, the next step is choosing an exchange. Type crypto exchange. The list you see on Google is mind-boggling!
Since it is not difficult to set up and maintain an exchange, many aspiring crypto entrepreneurs will resort to using an outsourced exchange with a customizable template. Therefore, there are so many exchanges on the market. Selecting an exchange with a reputable history is always a safe bet, for they will have the security and volume for you to make your purchase. Volume is important as you need someone to sell you $10,000 worth of Ripple at a price you wish to have $10,000 worth of Ripple.
So, look for the most reputable exchange you have access to within your region.
When it comes to buying cryptocurrencies, there will always be two types of fees; trading fees and withdrawal fees. These fees are unavoidable as any trade made will incur a trading fee, and any movement from wallet to wallet will require a small fund.
When you buy Ripple, you will incur a trading fee for that initial purchase. Likewise, when you sell your XRP, you will incur another trading fee for that sale. Therefore, there must be justification for you to choose an exchange with a high trading fee as these fees will eat into your profit margins.
Now that you have bought Ripple, what do you do with it while you wait for your investment in Ripple to blossom? Just leave it on the exchange?
That might not be the best idea!
Crypto exchanges are infamous for their hacks. Internet bandits tend to target exchanges, for they represent the fattest target. This is to the extent where even top exchanges such as Binance have experienced their fair share of hacking attempts.
The safest place to store your Ripple is on a hardware wallet as the private key to your wallet address never leaves the device. Examples of these wallets are the Nano Ledger and Trezor.
Final Thoughts On Buying Ripple
The steps mentioned above are a brief run-through on how to buy ripple. These include where to buy ripple, how to store the token, and an explanation of the project. However, there are many complexities in buying cryptocurrencies, ranging from technical analysis to investment strategies. But that will be a whole subject for another day.