by Lyle Daly | Updated July 17, 2021 - First published on June 17, 2021
Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
It's already one of the largest cryptocurrencies, and it could have serious untapped potential.
If you've been looking for crypto investment opportunities outside of buying Bitcoin, you may have come across XRP. It's sometimes referred to as Ripple, but that's actually the name of the company that created it.
Although XRP ranks in the top 10 by market cap, it's still far off the highs it reached in early 2018. It's also not available at most U.S. crypto exchanges due to an SEC lawsuit.
Cryptocurrencies are usually high risk, high reward, but XRP is even riskier than the typical coin. Let's look at what it does and how to decide if you should buy any.
XRP is the native cryptocurrency for Ripple, a payment technology released in 2012 and intended to make international money transfers faster, cheaper, and easier.
In a best-case scenario, Ripple would replace SWIFT and become the method of choice for international money transfers. SWIFT's market dominance means that won't happen anytime soon, but there are several advantages that could help Ripple chip away at it. Here are the biggest benefits of Ripple as a payment technology:
Since XRP is Ripple's cryptocurrency, buying XRP is a way of investing in Ripple. Just like you can buy Ether if you believe in Ethereum, you can do the same with XRP and Ripple.
Ripple has ambitious goals, and it has been making progress on them. According to its website, its RippleNet payments network includes over 300 financial institutions across over 40 countries. That's a start, but SWIFT is still far ahead. It's partnered with over 11,000 financial institutions across over 200 countries.
It's also worth noting that many of the financial institutions partnered with Ripple use RippleNet, but not XRP. The network can be used to process transactions for all kinds of currencies and commodities. Banks that use it aren't required to use XRP, and quite a few don't because of the volatility.
The most significant obstacle for Ripple and XRP right now is an ongoing SEC lawsuit. On Dec. 21, 2020, the SEC filed a lawsuit alleging that Ripple sold $1.3 billion in unregistered securities through its XRP cryptocurrency.
Ripple claims that XRP isn't a security. It has also said that the SEC didn't provide it with proper notice that selling XRP would be considered a securities offering.
One potential outcome is that Ripple and the SEC come to a settlement agreement. Until that happens or there's a ruling, the lawsuit will be a thorn in Ripple's side for several reasons:
You could invest in XRP if you believe Ripple has potential and that it's likely to reach a favorable outcome in its SEC lawsuit. Keep in mind that it's a high-risk investment, even compared to other cryptocurrencies.
Ripple could prove to be extremely useful. International money transfers between banks can be slow, expensive, and difficult to even set up. Ripple solves those problems, and it has already secured hundreds of partnerships, including many with major financial institutions. There's also a large company behind Ripple that's focused on promoting it and moving it forward.
Despite its potential, there are several reasons to be cautious about buying XRP:
That last issue with XRP means that if you're interested in buying any, the first step is finding an exchange that sells it. Among the major crypto exchanges, Coinmama and KuCoin are two that offer XRP.
A popular recommendation with any cryptocurrency investment is to only put in what you can afford to lose. That advice is good to follow when buying XRP. It has potential, but there's no guarantee that it will be a success.
There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. And to find the one that's right for you, you'll need to decide what features that matter most to you.
To help you get started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and get started on your crypto journey, today.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Lyle Daly owns Bitcoin, Ether, and XRP.