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The coronavirus pandemic has created a great deal of uncertainty for investors. Uncertainty has become the new norm as volatility has been a constant in the markets since March.
One of the biggest factors that helped drive volatility down and the markets higher was the interjection of the U.S. Federal Reserve.
The Fed printed about $5 trillion to bail out distressed companies like the airlines and cruise lines, just to name a few. The government even handed out free $1,200 stimulus checks to much of the population to combat the tens of millions of job losses and encourage spending.
After all that money printing, investors are starting to question the soundness of their U.S. dollars. Supply and demand economics states that the more there is of something, combined with the ease with which it can be created, the less that thing is worth.
That's why some cryptocurrencies are so appealing. They can't be inflated and devalued because their supply is capped at a certain amount.
One of those cryptocurrencies with a limited supply is XRP, created by a company called Ripple.
In this article, we'll give you our best Ripple price predictions for the next five years.
We'll also break down advantages and disadvantages Ripple has compared to the U.S. dollar and its other crypto competitors.
Let's get started…
What Is Ripple and What Does It Do?
Prior to diving right into the underlying factors affecting XRP's price, let's explore Ripple and learn more about what it does.
Created in 2004 and launched in 2005 by Ryan Fugger, Ripple Labs is a tech company that enables worldwide payments between financial institutions, banks, payment providers, and digital asset exchange entities.
Using blockchain technology, Ripple's main goal was to offer a dependable, quick, and cost-effective solution for payments to be sent in real time throughout the world.
In 2012, it was rebranded to OpenCoin, when Chris Larson and Jed McCaleb took over the project from Fugger. The premise behind this rebrand broadened its scope to develop its protocol as a payment solution for banks and other major financial institutions. A few years later, in 2015, the San Francisco-based, all-in-one digital payment network then resumed its original name of RipplePay when McCaleb left the company.
Today, it's simply known as Ripple.
With its U.S. headquarters based in San Francisco and an office in New York City, Ripple has offices throughout the world in London, Sydney, India, Singapore, and Luxembourg.
Now that you have a better idea of the company, its key premise, and its history, let's talk about the native XRP currency.
Ripple uses XRP and the XRP ledger – a distributed ledger database – while it supports tokens that represent fiat currency (government-backed currency), other types of cryptocurrency, and commodities.
What Is XRP?
Here's where many are confused between the two – XRP is an independent digital asset (cryptocurrency) and the native currency of Ripple, while standing separate from the Ripple network.
XRP is one of the top 10 cryptocurrencies available. With a $10.2 billion market cap, it's currently the fourth-largest cryptocurrency by market cap. Only Bitcoin (BTC), Ethereum (ETH), and just recently, Tether (USDT), are larger.
While Ripple is often referred to as the parent company for XRP, it's important to note that it does not own nor control the technology behind XRP, despite holding 60 billion XRP.
XRP is essentially a bridge currency and can be used by practically anyone, whereas the main users of Ripple are banks and other financial institutions.
The main premise of XRP tokens is to move funds and facilitate financial transactions across the world via Ripple's real-time, quick, and low-cost ecosystem. As of today, about 45 billion of the total 100 billion XRP tokens have been issued and are circulating in the open market.
Advantages of Ripple (XRP)
Exploring the advantages is an integral part of investigating factors that affect Ripple and XRP's price prediction.
XRP's scalability is one of its key advantages over other cryptocurrencies, enabling it to meet today's evolving demands. In fact, its underlying architecture was built with high scalability in mind – according to Ripple Insights, it's capable of sustaining a throughput of 1,500 transactions per second (TPS) on commodity hardware.
That makes it the fastest and most scalable digital asset available with the ability to send global bank-to-bank payments anywhere in the world in real time.
Another advantage to XRP is the fact that it isn't in competition with other centralized or decentralized cryptocurrencies that support the current financial system. Instead, XRP takes a synergistic approach with intent of future integration via Ripple's network.
Peak history plays an integral role in XRP price prediction. In January 2018, it achieved a breakthrough high of $3.84 per coin, which was an explosive 1,029% jump from its first-ever peak in May 2017, when its rate was priced at $0.34.
While it hasn't seen this type of peak since, it's still deemed appealing due to its potential for rapid, exponential growth.
And while it's not geared toward being an investment vehicle, XRP's low price and huge market cap gives it an advantageous entry point for investors not looking to spend the money for either Bitcoin or Ethereum.
Disadvantages of Ripple (XRP)
There are also disadvantages that must be considered before you invest in XRP.
In general, the cryptocurrency market is a challenging one due to its dynamic, unpredictable, and volatile nature. This serves as a disadvantage to investors because prices have been known to encounter drastic fluctuations, making a long-term forecast for XRP price prediction quite difficult.
That said, XRP sales have declined since its highest peak, and there have not been any significant breakthroughs since 2018 (the last time it was priced over $1).
Meanwhile, a key concern for Ripple is its slow-moving adoption rate. This, coupled with the fact that it's no longer a new technology, is a disadvantage, since most would have expected for its service to be adopted by now.
Among the number of partnering banks and other financial institutions Ripple currently has, only a limited number of these larger partnering institutions are testing their services, which has hindered its broader acceptance, thus inhibiting wider adoption.
This is a key factor to consider in Ripple's price prediction because it may take a while for banks and financial institutions to fully adopt and utilize Ripple until more advancements in technology are made and improvements in infrastructure are implemented.
This leads to another potential challenge that could essentially risk Ripple's livelihood – the notion of competing technology being adopted in its place.
Ripple and XRP Competitive Differentiating Factors
As with all businesses, having a competitive advantage is integral to achieve success. Here's how Ripple and XRP are different from their competitors…
For starters, governments favor XRP's transparency and the fact that Ripple has established, real-world, viable partnerships versus focusing its efforts on the mere chase of investors. Additionally, Ripple has a solid regulatory framework, which has enabled it to win numerous misconduct lawsuits over the years.
And, unlike other cryptocurrencies, XRP is actually advocating for compliance to greater crypto market regulations. This could essentially lead to an exponential XRP price explosion that could leave competing digital assets in the dust.
Ripple also aims for XRP to integrate with banks, governments, and the current financial system places it at a competitive advantage over those in opposition. Many believe this is positive for Ripple based on the fact that it has signed over 300 banking and financial partner institutions all over the world, including Bank of America, HSBC, Accenture, MoneyGram, and the National Bank of Egypt, just to name a few.
In addition to Ripple offering a faster solution at a lower price point than that of its current competitors, XRP's transaction speed of 1,500 transactions per second (TPS) highly exceeds that of both Bitcoin (at 6 TPS) and Ethereum (at 15 TPS).
Ripple & Our Best XRP Price Prediction for Potential Investors
The question remains… Is XRP a good investment?
The truth is, financial analysts and industry experts are split in their opinions and forecasts.
While some focus on the many advantages of XRP over competing digital assets combined with the unique infrastructure of Ripple, they are optimistic in the potential of XRP reaching another bullish peak back to $4 per XRP and as high as $20 by 2025.
That would mean potential returns of 1,670% to 8,750% from its current $0.226 price.
Meanwhile, others may lean toward the disadvantages and may be inclined to potentially predict a steady decline relative to Bitcoin over the next decade.
Whichever side you're in agreement with, it's important that you take into consideration the many factors involved that affect your vantage point toward making your XRP and Ripple price prediction.
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