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Regarding the crypto landscape, XRP is a name that comes up very often. It is the digital asset of the Ripple network, and it has had a fair share of advocates and critics.  While XRP indeed presents a solid investment opportunity, it’s definitely not perfect – but which investment is, anyway? When deciding whether to buy Ripple, looking at its pros and cons is essential because this will allow you to make an informed decision. Ultimately, you need to remember that no investment is right for everyone, and it all depends on your risk tolerance and financial goals. To determine if Ripple is an excellent addition to your investment portfolio, check out the benefits and downsides of this crypto project below.

Benefits of Ripple

Considerable price correction

In 2021, XRP experienced a sharp price decline, going from $1.83 to $0.51. At that moment, it was also undergoing litigation with the SEC. However, this price movement was also linked to the negative dynamics that the crypto market saw at that time. However, things changed for XRP soon, and even if the court granted the SEC’s request to prolong the case consideration by two months, the price of XRP increased from $0.51 to $1.39.

In January 2023, the asset saw a plummet once again because of Bitcoin’s price decline, but it emerged stronger and showed its resilience once more. This price correction means that XRP could see a major price increase if the crypto industry continues to grow, and the court case ends up in XRP’s favor.

Fast transfers

XRP enables you to send money across borders really fast – more specifically, transactions take less than 5 seconds, which makes it a lot easier for individuals in different countries to exchange services and goods by relying on this digital currency instead of traditional banking. This is a notable advantage because it offers XRP an advantage as a replacement for the current international payment system.

So far, the adoption of XRP has seen traction because of its fast transaction speeds. In many countries, banks have implemented XRP for cross-border payments. As this use continues to gain traction, the value of XRP will increase as well. This is one reason why, despite the legal issues XRP has faced, it still remains one of the best cryptocurrencies to consider.

Increased accessibility

The potential value appreciation of crypto is highly impacted by where it gets listed. When it becomes easily accessible on large exchanges, this means that investors can easily purchase it and support its price.

While some exchanges aren’t offering XRP anymore due to its case with the SEC, major crypto platforms still list it, giving strong liquidity to the crypto project. Besides, if the case against Ripple has an outcome that benefits Ripple, the future can only get bright.

A large use case

Many cryptos are looking to replace the banking system with their innovative nature and features. However, that’s not the case for Ripple, which instead works with financial institutions with its RTXRP remittance features. The founders and developers of Ripple know that financial institutions aren’t likely to go anywhere in the future, so instead of aiming to replace them, they offer quick, secure, and easy settlement procedures.

This isn’t the only reason Ripple has appealed to many banks; it’s also a sign of security and trust for investors.

Cons of Ripple

Like any other investment, Ripple isn’t without risks, and it’s essential to be aware of the downsides before you put your money into this project.

No new Ripple coins will be created

To understand Ripple’s value, examining other crypto projects and the number of coins in circulation is essential. For instance, it’s known that Bitcoin has a limited supply of 21 million. On the other hand, Ethereum is limitless, but its production will decrease over time. While the limited supply for Ethereum and Bitcoin could boost demand in the future, translating into potentially bigger profits for investors, that’s not really the case when it comes to Ripple.

XRP coins are pre-mined, and no other ones will be developed; in fact, every XRP coin that ever exists is already in circulation at the moment.

Ripple isn’t decentralized

In the eyes of blockchain purists, XRP isn’t a real crypto project, and many argue that it doesn’t follow the principles of economic autonomy and decentralization. Unlike Bitcoin, which users can mine and exchange anonymously, Ripple was created for the banking and finance sector. Its primary purpose is to solve problems in the banking sector instead of revolutionizing how people store value or conduct transactions.

Unlike Bitcoin and Ethereum, Ripple’s XRP coinage is primarily pre-mined, which means that no other coins will ever circulate in the market. As a result, the project’s developers hold a major percentage of the XRP coins, which is seen as a concern as it works against the idea of decentralization, which is the foundation of the crypto philosophy.

Ripple owns a massive share of XRP

The Ripple chairman owns about a third of the XRP coins available, and so do other senior board members. This business model is unique and different from other cryptocurrencies, which use mining for transaction validation. Instead, Ripple holds about 48 billion XRP out of 100 billion in escrow and releases up to 1 billion tokens every month to control the supply of the token and maintain price stability.

Since so much XRP is concentrated in only a few hands, there’s a strong likelihood that the asset’s price could be overinflated.

Takeaway

After reading this blog, hopefully, you will have more clarity about whether or not Ripple is a good investment for you. Although Ripple has some excellent features that make it unique in the crypto landscape, the downsides cannot be ignored, and some of them may actually pose a real challenge to some people. So, make sure to analyze the risk vs reward factor and determine by yourself if Ripple is a worthwhile investment. In the end, you’re the only one who can decide if Ripple should be part of your investment portfolio based on your goals and preferences and your financial situation.