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/
Also you can download the app and Start Trading Now!
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What Is Crypto?
Crypto or a cryptocurrency is a digital currency protected by cryptography, making counterfeiting and double-spending nearly impossible. Blockchain technology is used to produce cryptocurrencies (a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a government does not issue them. The word "cryptocurrency" refers to the encryption methods employed to keep digital currencies and the network secure.
Can I Invest In Cryptocurrency?
Yes, with exchanges like WazirX, you may invest in cryptocurrency in India. To begin, go to the WazirX website and register. After that, you will receive a verification email. The link received by verification mail will only be available for a few seconds, so make sure you click it as quickly as possible. This will successfully verify your email address. The following step is to set up security, so choose the best solution for you. After you've set up the security, you'll be given the option of continuing with or without completing the KYC process.
Is Crypto Legal In India?
Cryptocurrencies are legal in India, and anyone can purchase, sell, and exchange them. It is currently uncontrolled, as India lacks a regulatory structure to oversee its operations. Per the Ministry of Corporate Affairs, companies must now record their crypto trading/investments within the financial year. In cases where a person receiving the gains is an Indian tax resident, or the cryptocurrency is regarded as domiciled in India, cryptocurrency transactions have been taxable in India
Who Invented Cryptocurrency?
Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.
What Are The Best Cryptocurrencies To Invest In?
The best cryptocurrencies to invest in would be the ones you study and analyze in detail. Some of the most popular cryptocurrencies include Bitcoin, Ethereum, and many altcoins such as Tron, Ripple, Litecoin, etc.
How To Invest In Cryptocurrency?
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is considered the procedure of verifying and adding transactions to the blockchain public ledger. Another option is via cryptocurrency exchanges. Exchanges generate money by collecting transaction fees, but there are alternative websites where you can interact directly with other users who want to trade cryptocurrencies.
Is Cryptocurrency Safe To Invest In?
Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.
How To Invest In Cryptocurrency In India?
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is the process of verifying and adding transactions between users to the blockchain public ledger. Purchasing cryptocurrency in India is a straightforward procedure where investors simply participate by registering with a crypto exchange such as WazirX. After registering for an account, citizens can trade multiple cryptocurrencies, store cryptocurrency in wallets, and more.
Is Mining Cryptocurrency Legal?
Cryptocurrency mining can be time-consuming, expensive, and sporadically profitable. Mining has an appeal for many cryptocurrency enthusiasts as miners are paid directly with crypto tokens for their efforts. The legality of cryptocurrency mining is dependent on where you live. In India, there is no restriction on crypto mining.
How Many Cryptocurrencies Are There?
There are over 5000 other digital currencies available on the internet in addition to Bitcoins. The only problem is that they haven't gotten the users' attention. Besides Bitcoins, a few other digital currencies have gained popularity among users. It's been more than ten years since Bitcoins were first released, and now they've achieved new heights thanks to their phenomenal success.