There’s no denying that Bitcoin sits atop the cryptocurrency food chain. This respect and popularity are not misguided though, as it was the one that started the whole revolution with this new form of digital currency as a means of exchange.
It singlehandedly holds almost 40% of the market. Though you may only hear of a few, this is a market that is home to over 1,000 different cryptocurrencies. Bitcoin attempted to launch a medium that is decentralized and allowed for ease of transaction processing. Most importantly, there is a workflow that promotes fairness and equality.
The fact that the cryptocurrency realm didn’t become a Bitcoin monopoly is a testament to the effectiveness of the execution. This is the reason that people can talk about other currencies that have been gaining steam.
Ethereum, for example, is an alternative that stands out with 18% of the market share. Not only does it provide a means of exchange, but there is also a platform, which serves developers as they build and run autonomous applications.
Both these currency types have made amazing strides, which is obvious in their numbers. After all, Bitcoin started out being next to worthless and now trades for over $9,000 per coin. This isn’t even its best performance, as it peaked at over $17,000 in 2017.
Bitcoin and Ethereum have been the subject of much focus though, so this article isn’t about either of them. Today, the focus in on XRP, which is more affectionately known as Ripple. Here lies a cryptocurrency that is picking up steam in the world of business. This is especially true in the area of banking and finance.
The idea of this read is for you to understand a little more about Ripple, and for you to have an idea of where to go if you’re interested in purchasing some of the increasingly coveted currency.
The current banking system created the need for Ripple. Most of the things average people do in a bank work out fine. There are deposits, withdrawals, and even balance inquiries. However, these aren’t the only things that can be done in a bank.
There are many reasons why you’d want to do international transactions, and many of these transactions are transfers. However, you may get a bit annoyed and antsy when you hear that your transfer may take up to a week to complete. This is because of the path that the funds take once the transfer is initiated. There isn’t a transfer from one bank to another in many cases. What you get is a transfer that goes through a series of banks until it gets to the destination. There are delays at every node because of validations, currency conversions, etc. So while you have the speed of the internet at your disposal, your transactions can’t fully capitalize on it.
This is where Ripple comes in to make a difference. One of the things that cryptocurrencies aim to do is establish single standards for single operations. Ripple wants financial institutions to use one protocol, which can move money around the world at the speed of a click.
This is the reason that Ripple targets financial institutions. The source and destination fund currency may not be Ripple, but it can easily be converted. Once the conversion is done, the Ripple Transaction Protocol (RTXP) takes care of the transfer.
Of course, there are the matters of capacity and speed. Well, a transfer using the protocol reaches completion in four seconds, and 1,500 transactions can be processed per second. This means that 22,500 transactions can be processed to transfer completion every 60 seconds.
Ripple is still a cryptocurrency though, which means that there is always the question of stability. It may not look to be too unstable because of the low-cost bracket that it stays in. However, the percentage changes can be astronomical. One also must imagine that, as more institutions adopt Ripple, it only stands to increase in value, which means that the changes would have a great effect. Therefore, the current focus is to stabilize Ripple at least as well as currencies, such as the US dollar.
The focus of Ripple can be a turnoff for some, so you should ensure that you have a specific reason for wanting to acquire the currency. Initially, the idea was to allow private users to complete money transfers at high speed and low cost. Now, the focus has shifted to financial institutions, which doesn’t sit well with many users for obvious reasons.
Purchasing Ripple (XRP)
The actions necessary to purchase Ripple aren’t very complicated. The problem is all the options that exist for you to achieve the same thing. For example, the first step, which isn’t even initiating a transaction, has multiple ways that you can achieve it.
Your Ripple Wallet
This one is straightforward enough to understand. You don’t keep the money that you walk around with in your hands all the time. You also don’t keep it in nothing. Most people keep their money in their pockets or in a containment medium such as a wallet or purse.
Imagine that Ripple consists of coins that are very valuable and coveted by everyone around you. If you keep them in your palms, they are liable to be stolen. So the safest thing for you to do is to keep them in your wallet. This wallet can be hidden, and it prevents unauthorized access from unscrupulous individuals.
Cryptocurrency wallets tend to be software or hardware driven, and Ripple wallets are no different. Of course, there is software embedded into hardware wallets, but there is also a physical device, which is not the case with pure software wallets.
Software wallets are less secure and are mostly free. Hardware wallets are usually removable devices, such as flash drives that have your private key embedded within. Of course, the thing that you can remove and take along with you is the more secure alternative.
There are several hardware wallets available to store your XRP. It’s important to note that many of these also store other cryptocurrencies. There are also a couple of reserves that you should bear in mind.
Before you can submit transactions, you must have at least 20 XRP in your wallet. This simple barrier, which is known as the base reserve, prevents spamming, so the ledger growth is more easily contained. There is also an owner reserve, which is required for each object (i.e., transaction offers and trust lines) that an address (your wallet) owns.
Some of the top XRP wallets on the market are:
- Ledger Nano S
- Edge Wallet
Locating an Exchange
Once you have your wallet sorted out, the next step is for you to find an exchange to complete all your transactions on. You can think of an exchange as a place where traders come together to make and accept offers for purchase and sale.
It works in a similar manner to a stock exchange. Of course, since you got a wallet and you’re looking to do trading on your own, you’re not going through the equivalent of a stockbroker. There are brokers available for cryptocurrency trading, but people prefer not to use them because of the contract that is necessary to use them. It is known as a Contract for Difference (CFD), and though the broker trades on your behalf, you don’t own the digital resource, i.e. the cryptocurrency.
Note that a wallet is not needed if you don’t have the currency, as is the case with brokers. You also put yourself in a similar situation by investing in XRP funds, such as eToro. In this case, you can use an accepted monetary currency to buy and sell XRP, but you can’t transfer the XRP because you don’t have the ownership to move it.
Depending on the exchange you choose, the purchase methods can vary. The most common method of purchase is to use an accepted monetary currency, such as USD, to purchase the Ripple equivalent. You also have the option of trading XRP for Bitcoin on some exchanges.
On most of the available exchanges, you can use your bank funds to buy XRP. This can be done via debit card, credit card, or wire transfer. Not all exchanges support all three methods, so some research is required on your part. Many of them support one or two of the three options. Some of the exchanges you can check out are:
Note that some exchanges also support using Bitcoin as a payment method. If you have the Bitcoin to do so, you may find that this is the cheapest way to acquire Ripple cryptocurrency.
Using Your Wallet
Note that the XRP that you buy is not sent directly to your wallet. The coins stay in the confines of the exchange you used until you move them to your wallet. Note that coins that reside on the exchange are beyond your control, considering that you don’t have the private keys for them. Getting the coins into your wallet is the true final step required to complete your purchase.
While Ripple seems promising, it is still a cryptocurrency. These currencies have shown much promise over the past decade, but it’s still way too early to assess the likelihood of the entire industry crashing.