3 Things Investors Need to Know About Ripple

With a market capitalization of up to 177 billion USD, XRP is currently the third largest cryptocurrency in the world, only behind Bitcoin and Ethereum. However, behind this impressive growth are a series of complex issues that not every investor is fully aware of. Below are 3 key factors you should carefully consider before deciding to invest in XRP.

1. Ripple is not XRP One of the most common misconceptions among new investors is the use of the names Ripple and XRP interchangeably. In fact, these are two distinct entities but are closely related: Ripple Labs is a fintech company based in San Francisco, specializing in developing cross-border payment solutions. XRP is the cryptocurrency created by Ripple in 2012 for use in its payment network. Ripple is also often used to refer to the RippleNet payment network, while XRP is the primary currency unit in the XRP Ledger blockchain. This very difference has led to a historic legal battle with the SEC (U.S. Securities and Exchange Commission). The SEC argues that XRP is an unregistered security, which led to Ripple being sued in December 2020. The lawsuit has lasted for several years and is still in the final processing stage. This case is a clear demonstration of the legal risks that XRP is facing.
2. XRP – "The Bank's Coin" XRP is referred to as a "bridge currency" (bridge currency). Its main function is to facilitate quick conversions between fiat (fiat) currencies through the blockchain network. Therefore, XRP was originally designed to serve cross-border money transfers. Currently, XRP is primarily used for high-value transactions between banks and financial institutions. Its superior advantages in speed and low cost make XRP an attractive option in the field of international payments. This is why XRP is often referred to as "the banker's coin." However, to expand its application and attract banks, Ripple does not rely solely on XRP. For example, last year, the company launched a new stablecoin called Ripple USD, aimed at increasing the demand for XRP. It is worth noting that stablecoins can be a double-edged sword. They offer more stability and convenience compared to XRP, especially in cross-border transactions. Therefore, if stablecoins become a more popular choice, they could overshadow the bridging role of XRP, significantly impacting the growth potential of this coin in the future.
3. Tokenomics – The Story of XRP Ownership In the world of cryptocurrency, tokenomics refers to the mechanisms of issuance, distribution, burning, and management of the total supply of tokens. This is a very important factor for XRP, as there has long been controversy over who actually owns XRP. According to the latest data: The 10 largest wallets hold up to 41% of the circulating XRP supply. The 20 largest wallets control 50% of the total XRP supply. This is equivalent to 20 investors holding half of the Bitcoin supply, and it easily raises market concerns about the manipulation of XRP prices. Although the true identities of these wallets are difficult to determine, many believe that they are the founding members of Ripple or early venture capital investors. This raises concerns about the potential for large-scale sell-offs at any time. A typical example is in July, when XRP was peaking near 4 USD, one of the co-founders of Ripple sold 175 million USD worth of XRP, causing the price to drop sharply to 3 USD. This action raised questions among investors about the future of XRP – why would insiders sell when the market is euphoric? ✅ Advice Before Investing in XRP The three factors above indicate that XRP is not a simple investment as many people think. Although XRP has many strengths: It has existed for more than a decade. There is strong support from financial institutions. It is in the top 3 in terms of market capitalization.

...but it also comes with legal risks, competition from stablecoins, and issues of centralized ownership. Therefore, if you are considering investing in XRP, take the time to thoroughly research and understand the potential risks. If in the future XRP does not achieve the expected increase, you will also understand the reasons why. Conclusion: XRP is still a cryptocurrency with great potential, but also full of challenges. Caution and understanding are key factors that help investors go far with XRP in the volatile journey of the crypto market.