“It’s basically like a Bitcoin but for like banks or something right?”
The above statement is generally the extent of how much many cryptocurrency investors know about Ripple. For having the third highest market cap, many people still know surprisingly little about Ripple XRP or the potentially industry-shaking business that is Ripple.
If you find yourself in this category, don’t fret. You’re not alone, nor is understanding what Ripple does too far out of reach.
When it comes to exciting cryptocurrencies, the average investor is usually drawn to volatility. A sudden atmospheric surge in price for a random altcoin usually makes headlines, regardless of how viable an investment target that coin is.
Whereas some coins such as Monero and NEO multiplied in price, Ripple stayed relatively quiet. It still held onto being in the top 5 most popular coins, but it was just not exciting to watch. This led a lot of people to forget, or otherwise neglect to understand, what Ripple is trying to accomplish.
The opportunity Ripple is trying to seize is based on the inefficiency of the current global payment industry. The world sends roughly $155 trillion across borders, and this $155,000,000,000,000 (that’s a lot of zeros) is chipped away at with high fees and lengthy processing times. If you’ve seen a chunk of your payment from an international client go missing to fees, multiply that to an almost incomprehensible amount of money.
The recent and unexpected spike in price signaled a bull-run in a time where altcoins were generally down double-digit percentages.
The reason XRP saw some growth in October is largely due to the belief that Ripple is going to make a big announcement at their upcoming conference in Toronto called “Swell”. Traders are buying into XRP with the hope that the price will continue to grow after the conference. If anything, this should be a red flag. Anticipation has already been built into the current price, and if the conference is underwhelming, we’ll likely see a drop in price.
Other than the conference, Ripple has been expanding into Asia by opening offices in India and Singapore. Additionally, Ripple announced that RippleNet (their enterprise blockchain network) added its 100th member.
Is Ripple a Good Investment Target?
And so we arrive at the point that any keen investor has been asking themselves since the beginning of the article.
It’s important to emphasize that I am only providing you with information to help your decision and not financial advice.
In a recent AMA on Quora Sessions, the CEO of Ripple, Brad Garlinghouse, touched on why one should invest in Ripple:
“First a clarification on the question: Ripple is a private, cash flow positive company and we don’t have any plans to raise additional capital
As a general rule I try not to give investment advice, but I’m happy to give a summary of what drives Ripple’s and XRP’s value. Ripple is focused on enabling a global network of financial institutions to use our software to create what we call the the Internet of Value. Our goal is to lower the marginal cost of international payments to the point where money can move as easily as information does today.
As the network grows and adoption of Ripple’s products increases, the value of Ripple should grow as well.
As this occurs, the demand for XRP will increase and markets will reflect that.”
That being said, while Ripple is attempting to tackle an enormous problem and is perhaps the best-suited company to do so, there are some major drawbacks (in my humble opinion) investing in it for the long-term.
- Ripple (XRP) is not decentralized. Ripple, the holding company, owns about 61% or $16 billion worth of all the XRP. This means that they can release their XRP to have some control on prices. Since they have an enormous holding supply, this would only make the price go down unless they choose to buy XRP tokens back, which they haven’t shown any intentions to do.
- Ripple is all about low payment fees. That’s their edge over the current global payment system. It’s not in their best interest for XRP tokens to be worth a lot since that would increase the cost per transaction. Bad news if you’re looking for massive gains.
- There are 38,600,451,446 XRP in circulation, with a market cap of $9,983,659,362. There is also currently a maximum supply set of 100,000,000,000 XRP. The sheer supply curbs the growth potential. We’re likely not going to see a single XRP token follow a similar growth pattern of a NEO token (currently trading at $29.51).
- Ripple is one of the few companies in the cryptocurrency world that is making money and is working with actual clients. It’s pretty much an anomaly in a market full of tokens with only a whitepaper to their name.
- The global payments industry is worth trillions.
- The reason many big banks will have a lot of difficulty making their own Ripple spin-off is because they’re inherently self-serving and centralized. For example, Banko Alex has no incentive to adopt the primary usage of a Banko Moskov coin. These banks are stuck in a conundrum in having to create a decentralized coin while still maintaining control. Ripple serves as an objective third party intermediary that has only one primary objective: to facilitate global payments and earn revenue in doing so.
For me, Ripple has always been an interesting coin to watch. My interest is largely fueled by a frustration with the archaic global payments industry, and that aligns me with Ripple’s opportunity.
A few questions you should be able to answer prior to investing in any cryptocurrency include:
- What problems are they solving?
- Are they building something useful?
- What is their industry like (size, competitors, etc)?
- Do they have a competitive edge?
- What’s their founding team’s experience?
- How many tokens are released, or plan to release in the future?
If you’re interested in Ripple, I highly recommend following their three-day conference Swell. Two of their keynote speakers include Ben Bernanke, the former chairman of the U.S. Federal Reserve System, and Tim Berners-Lee, inventor of the World Wide Web. There’s a reason so many people are awaiting the conference with anticipation, and it’s largely to hear what these two speakers think about the current state of Ripple and the blockchain world.
As far as investing, that decision is up to you. Either way, Ripple will be an interesting story to follow.
Trade Recommendation: Syscoin
The price bounced from the support zone formed by the uptrend line and SMA50. MACD and DMI support upward movement. If the price breaks the resistance level and the previous swing high, we’ll get a signal confirming that the market is going to move higher. Pending orders for buy can be placed at 0.00002550 level with stop orders at 0.00002150 level. Profit targets are 0.00003000 and 0.00003800 resistance levels. If you don’t use leverage, trading volume for this trade is up to 5% from your deposit.
Profit Targets: 0.00003000 and 0.00003800
The trading signal is based on Poloniex chart.
Disclaimer: The analyst does not have investments in Syscoin.
Trade Recommendation: Ride the Next Rally of Bitcoin
The profit taking period that saw the Bitcoin market fall from 19,697 to a low of 13,501 in a matter of a few days is almost up. The market appears to have generated a new higher low and will use that level to make its next move up.
Technical analysis reveals a large reversal pattern in the hourly chart that could signal the end of the correction. In addition, volume has been steadily decreasing. On Coinbase, volume spiked by as much as three times its average value in the hourly chart during the height of selling. In the last seven hours, however, volume has been way below its average indicating that bears have lot ammunition. More importantly, RSI in the hourly chart is far from overbought territory. This gives the market a lot of room to breach resistance at 18,000.
The strategy is to buy the market when it goes above 18,000. With signs of selling exhaustion, bears may not put up much of a fight the next time the pair breaches 18,000 on Coinbase. Also, the market has no stiff resistance above 18,000 so it has a clear path to our target of 22,500.
Hourly Bitcoin Chart on Coinbase
As of the time of writing, Bitcoin is trading at 17,200.
Summary of Strategy
Buy: breach of 18,000
Support: 17,200, 16,800, and 16,450
Stop: Move below 16,450
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
Ethereum Just Broke $700 for the First Time
Ethereum caught a tailwind higher on Wednesday, as prices broke above $700 for the first time ever amid general optimism in the cryptocurrency arena.
ETH/USD Price Levels
The ETH/USD exchange rate was trading at session highs at press time, rising 18% to $721. Trade volumes surged, with 24-hour turnover exceeding $5.2 billion. That’s equivalent to around 301,779 bitcoin.
Trading activity was spread out across the major exchanges, with Coinbase’s GDAX accounting for more than 11% of total transactions. South Korea’s Bithumb also accounted for roughly 11% of the daily transactions.
At present values, Ethereum’s market cap is $68.7 billion, according to CoinMarketCap. Ethereum is the world’s second largest cryptocurrency by overall market capitalization, outshined only by bitcoin.
Ether’s surge appears to have originated Tuesday afternoon, when prices first broke $600. By the early evening, ETH/USD was trading near $670. A sharp correction back down to $600 would soon follow before prices resumed higher over the next 12 hours.
Prior to the latest rally, ether found itself in a prolonged rut as prices struggled to rise above $500. Some analysts say ether’s transaction woes are limiting its upward momentum. The platform currently supports around 15 transactions per second. By comparison, Visa processes 45,000 per second. For ether to generate mainstream appeal, it will likely have to increase its transaction capacity. Discussions on the best way of doing so are ongoing.
Swiss Banking Giants Leverage Ethereum
Ether’s newfound strength comes on the heels of a new partnership announced by Swiss financiers UBS, Barclays and others to advance data collection and reconciliation tied to upcoming MiFID II regulations. The consortia, which also includes KBC, SIX and Thomson Reuters, is relying on Ethereum’s smart contracts to allow financial institutions to identify and sort out data-related anomalies. By leveraging smart contracts, the banks will be able to reconcile sensitive reference data without compromising sensitive information.
By using smart contracts, the banks hope to bring down costs associated with data collection and storage.
A UBS analyst heralded the partnership as an important step in advancing blockchain’s benefits beyond the obvious clearing and settlement market. MiFID II regulations will come into effect Jan. 3.
The cryptocurrency’s use cases have grown since the Enterprise Ethereum Alliance (EEA) was established. EEA boasts an impressive collection of Fortune 500 companies, startups and subject matter experts converging on smart contract research and development. The goal of the Alliance is to “define enterprise-grade software capable of handling the most complex, highly demanding applications at the speed of business.”
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
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