XRP (Ripple) 10 Things you must know before Invest in XRP
XRP (Ripple) 10 Things you must know before Invest in XRP
If you’re considering investing in Ripple (XRP), you should know a few things first. First, XRP is a cryptocurrency that Ripple created. It is one of the largest cryptocurrencies by market capitalization and is designed to be used as a payment system. XRP can be used to send and receive payments in any currency, including fiat currencies such as USD and EUR.
XRP, like all digital assets, is frequently a source of consternation, mystery, and speculation. So, to clear the air, here are ten things you should know about XRP.
1. XRP is the only digital asset created specifically for financial institutions and payment processors
Many digital assets have no clear purpose. They can be used to store value, purchase commodities, or conduct consumer transactions, but they were not designed with a specific application in mind.
XRP, on the other hand, is focused on value transfer and is designed for businesses, making it one of the few digital assets with a clear use case.
2. One of the most scalable digital assets
XRP is one of the most scalable and fastest digital assets. Its Ten-year history of dependable technology and governance qualifies it for institutional and enterprise use.
Since its inception, all ledgers have closed successfully. Furthermore, the XRP ledger can handle 1,500 transactions per second, 24 hours a day, and can scale to handle the same throughput as Visa.
XRP is the best digital asset for payments, enabling the Internet of Value, while other digital assets have struggled to establish a strong use case.
3. It serves as a link between fiat currencies
Some digital assets, such as Bitcoin, seek to supplant existing government-backed currencies. XRP works with fiat currencies on many digital exchanges to help transfer value quickly and efficiently across borders.
For example, if a Mexican company wants to pay a supplier in Korea today, it must either pre-fund an account in Korea or use a foreign exchange provider, such as a bank. Both options are costly and time-consuming. Instead, the company’s Mexican bank or local payment provider can make the payment instantly and on-demand using XRP. With no account pre-funding or foreign exchange fees, XRP allows for faster and less expensive settlement.
4. XRP enables faster, less expensive, and more dependable cross-border payments
XRP provides a dependable, on-demand source of liquidity for cross-border payments to banks and payment providers. Today, it takes three to five days to transfer money from one country to another via a bank, which usually entails high fees and the risk of delayed payment (or never going through altogether).
Businesses can also pre-fund Nostro accounts in the recipient’s country, tying up capital. XRP is a component of a solution that addresses all of these flaws, with an average settlement time of 4 seconds and at a fraction of the cost.
As a result, XRP will help financial institutions expand into new markets, lower foreign exchange costs, and provide faster payment settlement for their customers by allowing them to source liquidity on-demand, in real-time, without having to pay foreign transaction fees or pre-fund Nostro accounts.
5. It is a component of a larger network solution for faster cross-border payments
Ripple is dedicated to resolving cross-border payment issues and building an Internet of Value in which we move money as efficiently as we exchange information. Its solution entails developing a common payment standard and utilizing XRP as the digital asset that will connect previously disconnected ledgers and blockchains.
6. XRP scales better than Bitcoin
Bitcoin can process up to seven transactions per second, with each transaction taking more than two hours to complete. However, when compared to a traditional payment service like Visa, which averages 2,000 transactions per second, Bitcoin lacks the scalability to meet typical customer demands.
7. It is safe
XRP transactions take place and are recorded on the XRP Ledger. It is an open-source code base supported by a community of trusted validators and a full-time engineering team that actively develops and maintains the ledger. Since day one, we’ve been decentralizing the XRP Ledger to make it more resilient and resistant to a single point of failure, and this process is still ongoing.
8. XRP has a longer lifespan than mined digital assets such as Bitcoin
Bitcoin is a mined digital asset, which means that new coins are constantly created by massive data centers solving complex math problems, a process known as “proof of work.” This inefficient system, which has been dubbed “unsustainable,” requires massive amounts of electricity – the cost of producing one coin could power 3.67 US homes for a day.
Because XRP is not a mined digital asset, every single unit of the currency that exists today has already been created, with Ripple owning the majority (55 billion of which was placed in escrow) and the remainder held by companies and individuals.
9. XRP is the currency of the future
Banks and other financial institutions will begin using digital assets in their day-to-day business operations WHEN, not IF. It will be interesting to see who the winners and losers in the digital asset space will be. However, we are confident that XRP will succeed because it serves a purpose that is relevant to businesses and consumers worldwide – enabling financial institutions to send money across borders quickly, cheaply, and easily.
10. It is ISO 20022 compliant
The world is converging on a new global standard – ISO 20022, the de facto global data standard for modern payments.
To support this next step in global interoperability and meet the evolving needs of institucional and financial standards, Ripple is now part of the ISO 20022 Standards Body – the first member focused on Distributed Ledger Technology (DLT).
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Disclaimer: This article is provided for informational purposes only.
It is not offered or intended to be used as legal, tax, investment, financial, or other advice.