Ripple, the notorious crypto project, reached a partial victory over the US Securities and Exchange Commission (SEC) this summer. However, this is not the only reason for the hype. Ripple has created useful tools that simplify international bank transfers. In this article, we will delve deeper into Ripple’s solutions and discover whether it is worth investing in XRP.
Real-World Applications of Ripple
Ripple is a California-based crypto project that manages to create tools aiming to tokenize global payments. It was founded in 2012 by developers Chris Larsen and Jed McCaleb, operating under the name Opencoin until 2015. The current CEO of Ripple is Brad Garlinghouse.
The primary goal of Ripple is to aid financial institutions and everyday users in facilitating transactions through the XRP token. Traditional bank transfers, especially those across borders, often face three problems: they are expensive, complicated, and sluggish. Ripple seeks to address this triangle of issues.
💰 Problem 1: Traditional bank transfers are expensive
⚡️ Ripple’s solution: Swap assets into XRP tokens and conduct transfers via the RippleNet blockchain
The average commission for regular transfers in the US is up to $50. Traditional payment companies exercise monopoly power, dictating transaction prices to their advantage. Tokenized blockchain payments circumvent intermediaries, leading to reduced fees.
Ripple's lowest network fee is 0.00001 XRP (approximately $0.0000063), with possible variations based on the network's workload. Even during periods of high demand, Ripple’s fees remain cheaper compared to banks or Bitcoin. In May 2023, Bitcoin’s average commission reached $20, whereas Ripple maintained it at $0.0002.
In the winter of 2023, the average RippleNet network fee was $0.01. As for spring and summer, it increased to $0.02 amid Ripple's partial victory over the SEC.
💸 Problem 2: Currency conversion is difficult
⚡️ Ripple’s solution: Banks can transfer money in XRP to the recipient's bank
Imagine living in the US and intending to send $300 in RMB to a friend in China. Such operations typically require banks to keep a stash of foreign currencies (like yuan in this case). This approach is both costly and inconvenient, resulting in extended transfer times and high fees.
But your bank can transfer money in XRP to the recipient's bank. And then your Chinese friend will be able to exchange tokens for RMB in his bank.
Ripple collaborates with financial institutions such as the Indian IndusInd Bank, Brazilian Banco Rendimento, and Saudi-British Bank SABB, as well as with payment services like Novatti, MoneyNetint, SBI Remit, Nium, and LemonWay. The full list of Ripple’s partner services can be found on the project’s official website.
Unfortunately, Ripple’s coverage does not extend to all banks, limiting its geographical reach. For instance, it is not yet possible to transfer money from Kazakhstan to Great Britain. However, XRP can be easily purchased on P2P platforms and sent directly to individuals through crypto wallets without any middlemen.
🐌 Problem 3: Traditional bank transfers are sluggish
⚡️ Ripple’s solution: Instant transfers using tokens
Usually, transactions are processed within 24 hours, but sometimes it takes over 3 business days. XRP transactions are completed within seconds, so users do not need to wait for approvals, currency conversions, and lengthy transfers to distant banks. They just need to input the recipient's wallet address, specify the transfer amount, and click "send".
To come to the point, XRP transactions are faster, cheaper, and more convenient compared to traditional fiat schemes.
Here is a scheme of cross-border XRP transfers between financial institutions. The bank purchases XRP equivalent to the transfer amount and sends the tokens to the receiving institution. The recipient is then equipped with tools to get the money and can instantly exchange XRP for local fiat or another currency at the bank.
Ripple VS. SEC
Back in December 2020, former SEC head Jay Clayton accused Ripple of issuing and distributing unregistered securities (XRP tokens). The Ripple team disagreed with the allegations and began defending itself.
In the US, there is no clear legal framework for digital assets. To determine a digital asset status, the regulators use the Howey test. While devised in 1946, this test is ill-suited for crypto due to its old-fashioned nature. Despite this, the SEC believes that the test is enough for evaluating digital assets.
In July 2023, a court found out that XRP private sales were compiled with securities law. However, institutional sales could potentially classify XPR as a security.
Although the victory over the SEC was partial, the crypto community greeted the news positively. The SEC’s "blacklist" of 68 cryptocurrencies already attests to its regulatory stance. The only coin that the regulator considers a legally issued commodity is Bitcoin.
Since the court recognized that XRP private sales were legal, the crypto community hoped the SEC would take down its claims against other cryptocurrency issuers. Anyway, all these prayers never worked as the SEC did not accept the court's decision.
Assessing Risks of Investing in Ripple
XRP is Ripple's native token, with its fate closely intertwined with the outcome of the SEC vs. Ripple fight.
XRP is ranked #5 in the top 10 most capitalized cryptocurrencies on CoinMarketCap.
The crypto community views the partial victory over the SEC as a stepping stone toward the potential watchdog's failure. In 2023, mounting pressure on the SEC due to regulatory uncertainty led to initiatives for the SEC's head, Gary Gensler, to step down.
Some crypto market members believe that Ripple's fate can be determined by the 2024 presidential US election's result. Several crypto enthusiasts take part in the race. One of their competitors is the current US' head, Joe Biden, who never took the toll to support the crypto market. In particular, he proposed to impose a 30% mining tax and tighten market regulation. Donald Trump, who is also a presidential candidate, is criticizing Bitcoin, too, while making money on NFTs.
In case of crypto enthusiasts’ win, the SEC rhetoric might change. If they fail, it might get even tougher.
Ripple (XRP) Price History. The conflict with the SEC has greatly affected XRP. While XPR reached an all-time high (ATH) of $3.3 in the winter of 2018, it failed to replicate the subsequent highs of Bitcoin ($20,000) and other cryptocurrencies.
If you are considering an XRP investment, stay tuned for the news about the ongoing confrontation between Ripple and the SEC. The last active price growth showed up during Ripple's partial victory over the watchdog. Positive updates can make XRP skyrocket and vice versa.
Ripple also supplies banks with tools to create central bank digital currencies, which increases the coin's demand.
Check out the XRP August 2023 price prediction.
Discover the Best Ripple Wallets
Here are three XRP wallets for all occasions:
1. Cold-hardware wallets provide secure long-term storage. These physical devices — like a flash drive— offer an offline repository for crypto. This safeguard is considered the safest. The two most popular cold wallets are Ledger and Trezor, with a starting price tag of $49.
3. Non-custodial wallets for regular payments. Such wallets like Trust Wallet empower users with sole ownership of their access keys. These remain connected to the internet, facilitating convenient payments for goods and services in real-life scenarios.
⚡️Use our simple instructions on how to create a wallet for storing Ripple (XRP).
Where to Buy Ripple (XRP): Top 3 Options
For those who are looking for a platform to buy Ripple (XRP), there are three options:
🔥 itez platform, the most convenient and secure one. You can buy XRP on itez using conventional bank cards. With support of 30+ fiat currencies — including dollars, euros, tenge, lira, and kroner — itez provides a seamless and secure experience. Notably, purchases up to 300 euros do not require verification.
👍 Binance, OKX, Bybit, MEXC, KuCoin, and Kraken crypto exchanges. Prior to buying XRP, you will need to register and verify your account. Many crypto exchanges also feature P2P platforms, enabling direct XPR transactions without third parties being involved.
👌 Fast exchanges through BestChange. For those seeking rapid transactions, the BestChange aggregator is a convenient option. Exchangers listed on this platform do not require personal data disclosure or verification. However, this route may present higher security risks.
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This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.