THE RIPPLE EFFECT: XRP LEAVES BTC IN THE DUST - Crypto currency Guide

THE RIPPLE EFFECT: XRP LEAVES BTC IN THE DUST

By Brett Chatz, freelance consultant for CryptoTrades: (09-01-2018)

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Ripple Readies for Pole Position

According to Coin Market Cap, the price of Ripple heading into the second week of January is $2.54. With a total max supply of 100 billion XRP, the market capitalization of the digital currency is currently $98.484 billion. While the price of Ripple has plunged in recent days, owing to tweets from Coinbase that it has no immediate plans to list the cryptocurrency, interest in XRP remains strong.

Ripple is now at position #3 on a listing of 1,387 cryptocurrencies across 7,602 markets. By January 8, 2018, the total market capitalization of digital currencies was $751.211 billion, of which Ripple accounts for 13.11%. The log leaders in the digital currency realm include Bitcoin with a market capitalization of $256.422 billion and a price of $15,272 per unit, and Ethereum with a market capitalization of $111.879 billion and a price of $1,155 per unit.

What Drove Ripple’s Meteoric Rise to Popularity?

Between December 2017 and January 2018, Ripple soared 1,000%. When an asset appreciates so rapidly, traditionalists deem that a bubble. Precisely the same thing happened with Bitcoin in December when it reached a fraction under $20,000 per unit, before retreating sharply to the $14,000 – $15,000 range. In January 2017, Ripple was trading at $0.006 per unit, and it reached an all-time high of $3.83 for a 63,000% pop in just 1 year.

One element that has been excluded from digital currency price quotations is the impact of Korea’s demand for Ripple. This can explain, at least in part, the lackluster performance of Ripple in recent days. Many folks decided to sell XRP after the Coinbase announcement, fearing that the popular US trading exchange has no imminent plans to list this red-hot cryptocurrency. However, it is precisely the Asian markets – South Korea, North Korea, Singapore, Japan, Hong Kong, the Philippines, and others that are driving demand for many cryptocurrencies.

Ripple was developed 6 years ago, and it is designed for use in the financial sector. Banks, credit card companies, and other financial entities utilize this cutting-edge blockchain technology to transfer money internationally. Instead of days or hours, Ripple can process transactions in mere seconds. Plus, international banking fees are available at a fraction of the price that clients typically pay. The big story that drove the price of Ripple through the roof was its adoption by popular credit card company American Express.

There is mixed opinion among analysts about Ripple’s functionality. Cryptocurrencies are designed to be deregulated, decentralized, and anonymous means of transferring funds. However, Ripple is centralized and all transactions on the network can be tracked from the beginning to end point. Perhaps Ripple serves an intermediary function to bridge the divide between traditional financial transactions and the cryptocurrency arena. In this vein, it can serve an important purpose and possibly garner the trust and respect of purists and traditionalists.

Is Ripple the Only Legitimate Cryptocurrency?

Ripple serves a purpose in the financial world, and it is highly regarded as one of the most effective transmission mechanisms for international financial transfers. While everyone remembers Bitcoin’s spectacular appreciation of some 1,500% – 2,000% for the year, Ripple was 15 times better than that. Analysts like ShapeShift CEO Eric Voorhees believe that Ripple is a bubble. However, his opinion is biased given that he prefers Bitcoin, much like PayPal founder Peter Thiel. Overall, Altcoin is enjoying a spectacular run of form as everyday traders see them as value-driven investments.

Unlike Bitcoin, Ripple allows users to transact in fiduciary currency (fiat currency) like USD or GBP, as well as cryptocurrency (XRP). The actual Ripple network does not have any enforcement potential, meaning that participants are required to operate in a trust-based environment. The price of Ripple on Korean exchanges is approximately 50% higher than it is on European, UK and US exchanges. A more likely reason for the significant price drop in Ripple is that profit-taking has been taking place. This typically happens whenever an asset spikes in a short amount of time. Traders cash in and the price drops before buying on the dip begins all over again. This appears to be a market correction in the price of Ripple, although it is more likely simply a short-term correction.