A slight discussion has erupted around the XRP coin lately. Many experts consider XRP to be extremely undervalued and believe that the price could rise sharply after the end of the legal dispute with the American Securities and Exchange Commission SEC. Others are more cautious and view investing in the coin as a big risk. Is the risk of investing in XRP really too great?
In this article, we want to perform a risk analysis for the XRP coin and examine the future of Ripple’s cryptocurrency.
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What is special about the XRP coin?
In principle, the XRP coin is not a “real” cryptocurrency. XRP is responsible for transactions in the Ripple payment network. However, XRP is not decentralized, but is centrally managed by Ripple Labs. In this respect, the coin differs greatly from other truly decentralized cryptocurrencies.
The Ripple payment network uses blockchain technology to facilitate transactions between different international payment spaces. That’s why many big banks and financial institutions are already using the network right now. Transactions reach these businesses faster, more efficiently and at lower cost.
Why is the XRP coin considered risky?
In the past, the XRP coin was considered much riskier than other altcoins. This was mainly due to the fact that many large financial companies were already using the Ripple network during the last bull market of 2017. Ripple was considered much more established than many other projects.
But over the past 2 years, the XRP coin has not been able to build on its previous price levels. The all-time high of XRP is still in January 2018. During the last bull market, the coin was unable to rise as much as other cryptocurrencies. Because the legal dispute with the American stock market supervisory authority SEC still weighs down the course.
At the moment, there is a lot to think that Ripple could win the case. But the dispute drags on and meanwhile, XRP cannot reach its full price potential. Moreover, there is always a risk that the SEC is right and thus triggers a catastrophe at Ripple.
What would be the consequences of a defeat for Ripple?
If Ripple as a company loses the process despite the recent positive news, it would have very negative consequences for the company and its founders. They would be guilty of illegal securities transactions. Confidence in the company would be shaken for many partners and the cooperation could fail.
Moreover, Ripple and therefore the XRP coin would be subject to much stricter rules than “real” cryptocurrencies. Ripple would hardly have a competitive advantage anymore. Here too, existing or new cooperations could fail. The XRP coin should then lose massively in value.
Is owning an XRP coin too risky?
Owning the XRP coin is boycotted by many investors as they view the ongoing litigation as too big a risk. On the other hand, the other party believes that the XRP price is so undervalued at the moment that an investment could be particularly interesting at this time.
We tend to be on the side of the optimists. On the one hand, Ripple has almost always scored interim wins against the SEC in recent months. The price of XRP could therefore increase massively in the months and years to come. The upside potential still looks huge ahead of us. Theoretically, XRP could even soon return to the top 3 cryptocurrencies behind Bitcoin and Ethereum.
Is an investment worth it for you?
In the end, you have to decide for yourself if you want to invest in the XRP coin. As with all other cryptocurrencies, investing involves a certain amount of risk that you need to take. XRP also offers huge potential for the future and the price could rise massively in the next bull market if Ripple wins the lawsuit.
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