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There is no dearth of rumours and outrightly ridiculous claims that slander/malign the cryptocurrency space. But some misconceptions originate at a fundamental level.
They stem from a basic misunderstanding of a particular crypto asset’s underlying protocol, market valuation and the people/organizations associated with it.
XRP is one such cryptocurrency that has been a butt of many myths and misrepresentations. Let’s look at them in detail.
XRP Is The Next Bitcoin
Ripple’s cryptocurrency XRP is not the next bitcoin, as the XRP community has cried out umpteen number of times. It was never meant to be.
According to the San Francisco based payments firm, XRP is meant to act as a “bridge currency” for global banks, payment processors, and other financial institutions.
The token is intended to be used to settle cross-border payments faster and more cheaply than current international payment networks. According to Ripple’s website, the XRP Ledger that runs XRP can settle 1500 transactions per second with a $0.0000542 with a transaction fee. This is not possible on Bitcoin.
Also, the XRP ledger doesn’t employ proof-of-work mining, which positions it and XRP, diametrically opposite to Bitcoin.
XRP Is Not An Actual Cryptocurrency
Two words make up the word cryptocurrency – ‘crypto’ and ‘currency’. Crypto stands for cryptography. A cryptocurrency uses cryptography-based encryption to successfully secure, conduct, and validate monetary transactions.
No individual or organization controls the creation and issuance of cryptocurrencies as they exist on distributed, decentralized networks called blockchains.
XRP ticks all the above boxes.
The XRP ledger uses a consensus mechanism that is different than proof-of-work (PoW) or proof-of-stake (PoS). Additionally the blockchain uses far less electricity than competition-induced networks.
There is no competition and no rewards in the XRP Ledger but it is still is a blockchain and XRP is a cryptocurrency.
Ripple Control’s XRP’s Price, And Can Print As Much As They Want
If Ripple would have had control over XRP‘s price, the token’s price today would be way over $1. It’s true that the company holds a major part of the XRP supply.
But Ripple cannot access most of the supply, due to a smart-contract-based escrow lockup, that is programmed to release 1 billion XRP tokens every month.
The move to put 55 billion XRP into escrow was made public in May 2017 and came into effect on December 2017.
Also, Ripple has been transparent about the total quantity of XRP sales. The data is open for public viewing on the official website.
Apart from this, the XRP supply is fixed at 100 billion and there is no way to program the minting of more XRP tokens. If that happens, it would require a major change in the source code.
The XRP ledger is decentralized and no single authority can decide to do it.
XRP Is Too Volatile For Banks To Use
Issues pertaining to volatility arise when assets are bought and held for extended periods of time. Ripple’s proprietary service for banks and financial institutions – xRapid and On-Demand Liquidity does not require them to hold XRP.
Banks use xRapid by buying and selling XRP to settle payments in the shortest possible time.
An average xRapid payment takes minutes, so the window of volatility is almost non-existent. This is because of the speed with which XRP can settle transactions on the XRP ledger, which is about 1500 transactions per second, closing a new ledger every 4 seconds.
XRP Transactions Involve Hidden Fees
Just like using any other blockchain network for monetary transactions, using the XRP ledger also involves a fee. XRP users decide the cost of that fee.
Validators on the XRP ledger prioritize transactions based on the fee amount. Hence, a higher fee guarantees a faster transaction.
Unlike other blockchains, validators don’t receive the XRP transaction fees. Instead, the transfer fees are burned, making XRP a deflationary currency.
These were some misconceptions regarding XRP. If you know more of them, do let us know in the comments below. Also, if you want to know how to buy XRP with INR, check out this link – https://wazirx.com/blog/how-to-buy-ripple-xrp/
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Frequently Asked Questions
Should I Invest In XRP 2023?
XRP is a virtual currency that was created by Ripple Labs. It is used to facilitate cross-border payments and is often referred to as a "bridge currency." XRP is one of the top Cryptos by market capitalization and is traded on many Crypto exchanges. You can consider investing in XRP in 2023, but it is also advisable to conduct your own research before making any investment decision.
Should I Buy Ripple Coin?
Based on your personal circumstances and investment plan, you should conduct your own research to determine whether the Ripple (XRP) crypto is a suitable asset for your portfolio. Always keep in mind that previous performance is no guarantee of future profits, and never buy XRP or any other Crypto with money you cannot afford to lose.
How To Buy Ripple Coin In India?
Here are the common steps by which you can buy Ripple (XRP) tokens in India at your trusted Crypto exchange, like WazirX.
- Select a trusted Crypto exchange, like WazirX, that supports the Ripple token.
- Create an account: You can create your account by providing personal information and complying with the KYC verification.
- Add funds to your account: Exchanges support various ways by which you can add funds to your account. You can do a bank transfer or a debit/ credit card.
- Buy Ripple (XRP): You can now easily trade Ripple (XRP).
Is Ripple Coin A Good Investment?
Ripple coin can be a good investment option due to its potential to revolutionize cross-border payments and its partnerships with major financial institutions.
How Ripple Coin Works?
Ripple is a blockchain that records transactions on its electronic ledger XRP. It is embedded with key pairs and only private key holders can validate transactions. For any transaction to be validated, Ripple uses the Ripple Protocol Consensus Algorithm where majority of operators need to approve the move.
Is It A Good Time To Buy XRP?
The future of Ripple XRP is uncertain due to ongoing legal issues and regulatory challenges. However, its value and potential will depend on how successfully these issues are resolved.
Can XRP Reach $100 Dollars?
To reach $100, XRP must climb 270 times. At $100, the market capitalization of XRP would be $5.1 trillion. If XRP rose at a 25% annual pace, it would take at least 26 years to hit $100.
How To Mine Ripple Coins?
Ripple (XRP) cannot be mined in the traditional sense like other cryptocurrencies such as Bitcoin or Ethereum. One of the most efficient techniques for mining XRP is to mine Bitcoin (BTC) and Ethereum (ETH) and then exchange the mined coins for Ripple (XRP) via Crypto exchanges.
Where To Buy Ripple Coin In India?
XRP, the native token of Ripple can be purchased through any licensed Crypto exchange by creating an account. It can be bought with Fiat or traded in exchange of other tokens on exchanges such as WazirX
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
Great blogpost!