Ripple / XRP - is it worth investing in?

Understand what XRP / Ripple is about and why it may be a smart move to invest in it right now.

Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network, while XRP (a.k.a. "Ripples") is the native digital currency the Ripple transaction protocol uses. Some people are in to speculate on XRP, the currency, others (especially banks and other large financial corporations) are excited by the opportunities the payment protocol brings. The original implementation was already created by Ryan Fugger in 2004 (which was actually before Bitcoin!), the intent being to create a monetary system that was decentralized and could effectively empower individuals and communities to create their own money.

The concept is in fact quite simple, and it's based on trust relationships called IOU's (which is short for "I Owe You"). Aspects of these trust relationships are:

a) Person A has to trust that his agent will do the right thing, as he is handing over cash.
b) Person B has to trust that her agent will do the right thing, as she is expecting to receive cash.
c) The agents need to trust each other over the repayment of the debt (IOUs).

With Ripple, websites or shops can perform the function of agents, but instead of agents phoning each other like banks would do it, the IOUs can be handled electronically. The great thing is that with Ripple, this doesn't only work for money: it also works for other physical goods like gold, foods, or any non-perishable, fungible product. Also, as long as both parties agree over it, the network can even 'morph' goods, like to "send" currency and the other party receives gold.

(you can watch the live Ripple network here; Image: naation.com)

But what if the gateway between two entities doesn't have a trust relationship? Then Ripple will try to find intermediary gateways who can form a chain of trust for the object being passed (cash, or gold, or whatever): also it will try to find the shortest trust path between the gateways.

If the network can’t find any chain of trust between the two gateways at all for the cash or goods in question, the Ripple Consensus Ledger's (RCL) native token comes in: XRP (or: 'Ripples').
All goods have a certain price in XRP, just as with fiat currency: in the Ripple network, 1 USD is currently worth around 240 XRP, gold will be a bit more. So goods can be converted to an amount of XRPs, these XRPs can be transferred and then converted back at the end gateway.

XRP's were created together with RCL with a finite quantity of 100 billion; no more XRPs will ever be created again. The number of XRPs will decrease over time as it is consumed for every single transaction that is made.

XRP is used when you:

1. Activate an account on RCL (open a wallet): 20 XRP reserved

2. Create a trustline: 5 XRP reserved

3. All transactions (buy/sell/bid/ask/send/cancel): Variable transaction cost which increases as the load on the network increases. This acts as an antispam measure to prevent attacks on the network.

(XRP price and volume both surged since its initial public offering. Image: Ripple)

Should you invest in Ripple and buy XRPs?

The banks Ripple is partnering with might evolve to offer businesses completely new types of value in the future, in addition to the lightning fast transactions (1000's per second, which feels almost immediate!) enabled by XRP. As a consequence of these perspectives, the price of XRP has skyrocket since their launch! This stands in stark contrast to the criticism one often hears in discussions about XRP: because the number of XRPs in distribution is so high, or because it is limited, or because the capitalization for the currency to rise would be unimaginably high, or because 'banks would be interested to keep the price low and/or stable', the currency would not have potential to significantly rise in value. Well, this has obviously been wrong so far - so why should that change in the forseeable future? 😉
The value of XRP swelled almost 4000 percent over the last year, roughly one American quarter per token is around 1,159 percent more value than XRP had in early 2017.

The low value of XRPs is ideal to test the waters with little money. I invested a few hundred Euros and litterally got thousands of XRPs on my account. Now imagine what will happen to my balance if the price of XRP would only rise from the current € 0.17 (Jul 2017) to only 1 Dollar? 😨

Personally, I am absolutely convinced that the value of XRPs will continue to rise remarkably over the next years. Let me outline why after having studied many documents, articles and introductions of XRP and Ripple during the last weeks before my own investment:

• banks are greedy. More and more banks will want to profit from the super-fast and cheap transactions.
• the price has developed that nicely even with the tiny fraction of the world's banks already using Ripple by now. Now what do you think will happen if more banks will use it?
• alternative systems like SWIFT are far from being at the same technological level with their own products. Banks, however, are under strong pressure to cut their costs and speed up transaction times as their customers already decline due to the availability of faster and more cost-effective payment options. Many banks simply won't want to wait for SWIFT any longer.
• the people behind Ripple are absolute professionals, no sneaky types with only a short-term hype in mind. If you have doubts, just watch a few video presentations by managers of Ripple Inc. on Youtube and see yourself.
• by the end of 2017, the amount of XRPs in circulation will decrease significantly as 70 billion (70%) of them will be put in escrow for 5 years. Now what is usually happening when resources suddenly become limited?....

Conveniently, XRP's can be bought at more than 20 exchange services already, including Kraken.com .

How to store your XRPs?

• Exchange service: you could just leave them there if you mainly intend to market-trade with your XRPs
• Online wallet at GateHub.net
• Hardware wallet: Ledger-Nano-S
• Desktop wallet: Rippex for Windows, Mac and Linux
• Paper wallet via the Ripple Wallet Generator or Ripple Paper Wallet - I've created a detailed article about how to send and receive Ripples / XRPs with a super-small offline wallet.
  Feel free to add other options you know about to the comments of this article!

As mentioned, don't forget that wallets have to be activated online with at least 25 XRP before using your new address.

I hope this article helped you to get a feeling about what Ripple does and what their native currency XRP is about, and maybe it even motivated you to try a small investment in it. I would be happy if it works out for you. I'd like to mention that I'm not in any way affiliated with Ripple Inc., I just think it's a great investment opportunity at a still very early entry point and thus a lot of potential for great returns, especially if you can afford to be a bit patient and avoid emotional decisions when it comes to financial strategies.

Here's a video that I found to be very clear and level-headed:

Let me know what you think in the comment section!