XRP, Ripple’s native currency, has taken the banking world by storm, soaring from under $0.01 to $0.79 a coin in under a year, with it currently worth around $0.73. But why did its value suddenly increase by 4300 per cent?
How does Ripple work and are there any risks?
Ripple acts as a payment network, RippleNet, and a cryptocurrency, Ripple XRP.
The platform makes it easy to transfer almost any currency to almost any other currency in the world in no longer than four seconds.
Currently, Ripple is focused on working with banks and other institutions in a bid to offer an efficient and cost-effective way of sending real-time payments around the world.
Using Ripple, if one wanted to transfer currency directly from China to the USA, they can trade CNY to XRP, (Ripples currency), and then send XRP to the recipient who will have an online Ripple wallet or a bank in the USA. From there, they can trade the XRP back into USD.
In comparison, transactions on Ethereum can take more than two minutes, and on Bitcoin payments can take more than an hour to be processed.
Ripple claims banks can save an average of $3.76 per payment using their network.
Since XRP only works directly with banks, the budding cryptocurrency is set to focus on developing networks to benefit finance corporations.
Although critics have questioned why the platform now focuses exclusively on banks, because it was launched to help everyday people make global transactions much easier.
But Ripple can appear risky. It’s open nature means nodes are vulnerable to attack, which could leave users unable to access their accounts.
Its technology is still in its infancy, so this means Ripple is subject to competition, and innovation.
Why has the cryptocurrency XRP spiked?
Ripple soared by 46 per cent on December 15, reaching a new record high of 0.8051, CoinGecko reported.
XRP reputedly gained such a boost in its value because Bitcoin’s continued growth has benefited the entire cryptocurrency market.
The global market is currently valued at around $488billion, Bitcoin accounts for less than 40 per cent of the daily turnover and Ripple accounts for a minor 4 per cent.
But experts believe it will enjoy a larger boost in value in 2018.
XRP also enjoyed a surge because of its new partnership with credit card company American Express, who are looking to offer instant block-chain based payments.
How to buy XRP
Ripple can be easily purchased using other cryptocurriencies like Bitcoin.
It is available on Bitstamp, where users can purchase them with their local currency.
Using an online wallet like GateHub, XRP can be stored in an online wallet. This will allow them to make purchases and even send XRP to other Ripple users.