The XRP price has soared over the weekend to overtake Ethereum as the second largest cryptocurrency in the world, thanks to three of the credit card majors from Japan and other big players in the financial markets. As the world moves in to greet the New Year, 2018, the last trading day of 2017 saw the market cap of Ripple rising to $76 billion overtaking the $73 billion market cap of Ethereum, though well behind the $246 billion of Bitcoin.
The last quarter of 2017 has witnessed some seismic activity or fireworks in the global cryptocurrency space with Bitcoin leading the pack and taking its price to graze the $20,000 mark before settling around the$15,000 levels. Many of our readers would remember that Bitcoin was sitting below the $1,000 mark in December last and hoping that it would cross the coveted $1000 mark in the New Year 2017. Well, while Bitcoin did meet those expectations, it has perhaps surprised everyone through the quantum leap as we move into yet another New Year. It is, therefore, necessary to examine the frenzied activity in global cryptocurrency markets to understand the surging Ripple, at this point.
Cross-border currency movement aiding the Surging XRP price
Ripple is a cryptocurrency designed mainly for banks and businesses engaged in money transfers across the globe. The Ripple token is known as XRP and for the first time in its history the price of the token rose above the $1 mark on 21st December, quintupling its market cap to over $50 billion between just three trading days in that particular week with the bursting XRP price scaling yet another peak at $1.90 before settling down to $1.85 as at 2.15 pm EST on Friday the 29th December 2017.
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During 2017, the surging Ripple rocketed by as much as 28,000% to become the most valuable cryptocurrency under the sun, going by the data provided by CoinMarketCap, a price tracker for cryptocurrencies.
More banks and global financial institutions partnering with Ripple
Until a year ago, XRP price was somewhat stagnant, but in 2017 the surging Ripple notched up a collective market cap of about $75 billion. While there is inadequate clarity on this one-way run, we do know that Ripple successfully steered clear of some downward moves affecting other participants in the cryptocurrency space, such as Bitcoin during mid-December, 2017.
However, it is believed that the most recent events like a partnership with banks such as American Express and the credit card companies of Japan have significantly aided the surging Ripple. The present market value of Ripple also puts it on the list of 30 of the most significant banks in the world and ahead of Lloyds Banking Group of UK and Mizuho Financial Group of Japan.
The cross-border payment system of Ripple employs the blockchain technology which is the moving force behind most cryptocurrencies. A huge advantage that Ripple brings to the cross-border payments space is an astounding speed at a fraction of the cost charged by other payment systems. With Ripple’s technology, cross-border payments can be completed in a whisker – just about 15 seconds compared to about three days for banks using the Swift network for their interbank transactions created some four decades ago.
Technology aiding XRP price surge
The XRP reserves available with Ripple is significantly more than what is traded publicly, and its war chest is valued at about $115bn, and it has plans to use this for encouraging banks and other majors in the financial industry to use the technology. Ripple has already signed up over 100 such institutions for moving large volumes of money across the borders.
Ripple is also offering different types of transactions for cross-border payments. One such system allows customers to sell or buy XRP to move money with the speed of lightning. Another type employs the blockchain ledger for coordinating and recording interbank transfers between accounts owned by the respective banks.
According to Brad Garlinghouse, the CEO of Ripple, 2017 has been the digital assets year, and XRP has emerged as the winner. He also stated that the surging ripple had been aided by the market realizing XRP as an ultra-efficient payment mechanism to solve problems in the real world for customers with real money. He added further that there is an increasing realization among people that Bitcoin cannot be the solution for payment problems, though they had imagined it to be so, until some time ago.
In a lighter vein perhaps, he also added that if someone bought a coffee using bitcoin, the coffee would go cold by the time payment was settled, whereas payments are decided in just a few seconds with XRP.
Ripple is different from other cryptocurrencies
Another reason for the surging Ripple could be the fact that it is a different kind of digital currency and it can neither be mined nor used to shop around. Further, it is a private company that operates Ripple. Regarding size, Ripple is significantly small compared to the leader, Bitcoin. While Bitcoin rose by about 1400% in 2017 to reach a $245 billion market cap, the surging Ripple notched up a mind-boggling growth of nearly 28,000% in just the 12 months of 2017.
To understand the low dollar number XRP associated with the surging Ripple, you should also understand XRP itself. XRP is a token and not an actual digital currency. It is similar to what blockchain is to bitcoin, or ether to Ethereum. Another critical aspect of XRP is that it does not constitute a digital currency like bitcoin and merely represents a utility that financial institutions and banks can use to carry out their transactions. Ripple itself calls it a “settlement token.”
Multiple parties achieve consensus to validate Ripple transactions. Of all the 100 billion Ripple Coins existing now, 60 billion is owned by Ripple Labs (market cap of Ripple in other parts of this article does not include this 60 billion), and Ripple price numbers are not directly linked to the success of Ripple itself.
But, large financial companies and banks find Ripple an attractive option to handle movement of large volumes of cash across borders, particularly given the incredible speed with which such transactions are accomplished.
What is next for XRP price – up or down?
If you are now looking to buy the surging Ripple, Coinbase, the most famous brokerage does not offer it yet. Your options could, therefore, lie between Bitstamp, Bitso, GateHub or Kraken. But, we should also add a caveat that cryptocurrencies are experiencing extreme volatility in recent times and the swings are sometimes shuddering.