The cross-border cryptocurrency, Ripple’s XRP, is the world’s third-biggest cryptocurrency behind Bitcoin and Ethereum.
Ripple is both a platform used for the peer-to-peer transfer of currencies (RippleNet), and a digital currency (ripple XRP). The first one represents the functionality of the platform itself is an open source protocol created to allow fast and cheap transactions, mainly the exchange of assets, between two parties. In the traditional financial system, this exchange of assets like fiat currencies is done through Swift, a system which relies on banks having separate accounts in all the countries they operate in. The second one, the digital currency, represents the value of the platform as a service with an ability to transfer assets quickly around the world.
Ripple is built upon blockchain technology, so it relies on a common shared ledger, which is a distributed database storing information about all Ripple accounts. The network is “managed by a network of independent validating servers that constantly compare their transaction records.” Servers could belong to anyone, including banks or market makers.
The advantage of using Ripple platform to replace Swift is that many currencies of the world can’t be directly converted to another, so banks need to use US dollars as a mediator, resulting in double commission. Using Ripple is much cheaper than USD. Also, in terms of time, Ripple offers the huge advantage of being much quicker for these international transactions. Generally, with the Swift system, banks can take up several days to confirm and authorize the transaction. With Ripple, the average transaction time is four seconds which, if even compared with Bitcoin, is 15 times faster.
Ripple and government regulation
Differently from other cryptocurrencies, Ripple has held itself up as a model for its good relationship with government regulation and has done so for years. Ripple even has even set a goal of a potential initial public offering (IPO). The payments startup, Ripple, is the second company in the blockchain industry to obtain a BitLicense from New York State. It even can claim to have been the only one to add the architect of BitLicense to its board.
However, its relationship with regulators was tarnished by a lawsuit it is fighting against, which also led its CEO, Garlinghouse, to threaten to move the company’s headquarters out of the US due to the lack of regulatory clarity, particularly from the Securities and Exchange Commission (SEC).
XRP Led November’s Crypto Bull Run With 169% Gain.
Although for the most part of 2020 Ripple didn’t show any exciting performance, it was in November when it gained traction. From January 1 to October 31, the coin had risen by 24 per cent while its peers Bitcoin (BTC) and Ether (ETH) had soared by 92 per cent and 195 per cent respectively.
Barely two weeks ago, XRP traded at around $0.23 before it broke above the $0.56 price level, printing a gain of over 100%. It has also overtaken the most valuable stablecoin, Tether (USDT), to become the third-largest cryptocurrency.
Top crypto strategist and trader, Michaël van de Poppe, believes the fast-rising crypto asset is likely due for a correction, as it has gained over 100% in November only.
“We can expect XRP to relatively top out soon unless it flips this $0.50 level. So, if we get momentum like this and we flip there ($0.50), that would definitely argue that we’re going to see a continuation. But, given the significance of the previous range of resistance between $0.27 to $0.30, it would definitely be expected to see a correction towards that region, before we can see an impulse wave.”
Altcoins may be following Bitcoin’s lead in a bull market
The tendency for altcoins to catch-up with Bitcoin is an expected move and it happens when Bitcoin reaches a steady position during a bull market. Retail traders tend to notice gains in Bitcoin, as it happened during November, and they start looking for similar assets even if they represent a higher risk. So, this is an ideal period for altcoins since they share some of the spotlight that bitcoin is getting.
However, the other case-scenario would be a correction for bitcoin. In this case, volatility would hit altcoins with the same force and we would likely see severe price swings too.
That’s one factor to take into account with altcoins, including Ripple.
By Mickael Mosse, Cryptocurrency and Blockchain Advisor.