The ultimate beginner's guide to trading Ripple
Why Should You Buy Ripple Today?
What is Ripple?
Essentially, Ripple is both a blockchain platform and a cryptocurrency (XRP) owned by Ripple Labs Inc.
The goal of the platform is to do to money what the internet did to information sharing. Currently, cryptocurrency networks operate within closed systems. Banking institutions also impede the transfer of funds through lengthy processing procedures and transaction fees.
Ripple aims at providing a platform where a user can interact with all the other existing systems but using the new technology of blockchain to do so. Allowing users to utilise different payment systems will remove the centralised control of money from the grips of large companies and give people more freedom of choice.
To achieve this goal, Ripple has developed a network of institutional payment providers like banks and businesses that provide money service solutions. The aim is to create a global, frictionless money transfer which works together with our existing financial systems.
Ripple’s currency (known as XRP or simply, Ripple) is more of a mediator currency than an outright cryptocurrency itself. It can be whatever the user wants, almost like a wildcard in card games. Consequently, crypto-to-crypto or fiat-to-crypto exchanges cost less on the Ripple network and take a much shorter time to process.
What is Ripple Protocol Consensus Algorithm (RPCA)?
Ripple Protocol Consensus Algorithm (RPCA) is the network’s way of processing transactions. Ripple does not have a normal blockchain. Therefore, it has developed its own patented technology to verify transactions. RPCA requires that all the nodes involved in a transaction agree for a transaction to go through, rather than linking all of the transaction blocks together, as per a traditional blockchain.
Is Ripple a Good Investment?
This depends. You actually aren’t able to invest into the Ripple protocol itself, but instead can only invest in the currency XRP. Despite the confusing difference, it is acceptable to use the two terms interchangeably. While XRP, like all other cryptocurrencies, does not guarantee a 100% success, it is still a very good prospect to consider due to the way Ripple Labs are pushing their new technology.
Most people view the Ripple protocol as the next internet solution for payments as a whole. As the pressure on faster and cheaper transactions increases, banks will have to adopt a solution such as Ripple’s in order to evolve. This level of adoption will significantly increase the market value of XRP.
Besides, there is no more mining of XRP tokens as all the required 100 billion coins already exist. It eliminates the fear of inflation, which is a possibility in other cryptocurrencies such as Ethereum that have no limit on mining. But, as XRP is governed by Ripple Labs, they could dilute the price of the coin in the future by releasing more coins. This shouldn’t ever be the case, but it is a possibility.
Pros and Cons of Buying Ripple
Like all digital assets, Ripple too has its share of limitations alongside the benefits. Here are highlights of some of the pros and cons of this game-changing platform and currency;
- Energy consumption: The main issue with cryptocurrencies is the energy their mining consumes with Bitcoin currently being the main culprit. Estimates show that Bitcoin mining contributes to 1% of the world’s energy consumption! Ripple doesn’t have the mining ecosystem, and in fact, operates far leaner through centralised server resourcing. This makes it a faster, cheaper and environmentally friendlier way of day-to-day transacting.
- Partnerships: Several banks have accepted adoption of the Ripple protocol. They include Axis Bank, Santander, Yes Bank, NBAD, UBS, PNC Bank, Westpac, Union Credit, and the Royal Bank of Canada. Western Union and MoneyGram also use Ripple through a partnership with Wal-Mart.
- Less regulatory requirement: As banks and other financial institutions adopt Ripple, it will take fewer regulatory checks to use the network. It is unlike most cryptocurrencies that suffer suspicion from banks and other regulatory authorities.
- Real world usage: Numerous tests have indicated that the use of Ripple is beneficial in the real world. It sets it apart from most cryptocurrencies that offer solutions to problems faced only by geeks and Dark Web users.
- Continuous improvement: Ripple is continually improving its capacity. The goal is to surpass Visa’s 24,000 transactions per second. This will give it a competitive edge over established payment systems.
- Centralised: Decentralisation is a key fundamental principle of cryptocurrencies. Ripple currency, XRP, however, is highly centralised. Ripple Labs still holds over 60% of the coins that they only release at their discretion. It makes Ripple more like a virtual bank than a blockchain network.
- Account control: Again, like a bank, Ripple can reverse transactions and freeze accounts. It is another breach to the spirit of cryptocurrency as a whole.
- XRP usage: Ripple gives banks the option of not using the token. Most of the banks that have started using the platform do not use the currency. Ripple designed its xCurrent technology to make this possible.
- It is evident that Ripple has a promising future if it manages to deliver on its goals. However, the system’s deviation from the principles of cryptocurrency might impede its adoption. Again, the future market performance of XRP seems detached to a significant degree from the success of the protocol.
What are the Best Payment Methods to Buy Ripple?
Ripple is easy to buy, thanks to it being among the leading cryptocurrencies in the world. You can buy it using fiat currencies, in exchange for cryptocurrencies or through Contracts for Difference (CFDs).
- Buying using PayPal: Initially, you could purchase Ripple using PayPal through Virwox. However, the Virtual World Exchange ran into policy issues with the payment service provider leading to the suspension of PayPal from its site. However, you can still use PayPal’s alternative, Skrill.
- Buying using cash: It can only happen if you are buying from a person you trust. Finding a trustworthy person can be a real hassle. The other way is to buy BTC through a peer-to-peer local exchange. Most people at these exchanges are willing to accept cash. You can then exchange the Bitcoins for XRP at crypto-to-crypto exchanges.
- Buying with a credit card: There are some exchanges and broker platforms that allow you to buy Ripple. However, the charges are higher than if you took the longer route and used another payment method.
- Other payment methods: You can also use a wire transfer to purchase Ripple, but as Ripple isn’t really a core cryptocurrency, you’re more likely to succeed by first purchasing Bitcoin or Ethereum and then exchanging it for XRP.
Buying Ripple in Your Country
There are always factors to consider when planning to invest into the world of cryptocurrencies. One of these key factors is which country (or even state) that you’re purchasing from – as not all countries or areas allow the buying and selling of any cryptocurrencies.
Banks are also another key factor restricting any sort of fiat to cryptocurrency transaction. In certain banks, it is against their policy to send money to a crypto exchange. You have to figure out another way of paying for your coins. Also, certain nations have banned sending money to accounts in countries that they consider a threat to their national security or sovereignty.
In fact, some exchanges and trading platforms will only accept individuals from a certain jurisdiction. Alongside this, even if you’re accepted, sometimes the language you speak makes it difficult to navigate across the cryptocurrency world. English is normally always an option, but if it’s not your native tongue, then there are many platforms out there that don’t cater to you.
Is There a Difference Between Buying and Trading Ripple?
Though commonly confused, the two are entirely different. Buying a cryptocurrency implies owning and keeping it for the long term. Trading, on the other hand, is using the cryptocurrencies as a tool to exploit the fluctuations in market prices. The trader’s mantra is, buy low sell high.
So is there a difference between buying and selling Ripple? Yes. If you consider Ripple as a very long-term investment, then you should buy, and keep the coins for the long run. The investor may once in a while sell part, not all, of the coins during the high prices to buy more when the price falls. However, the short term fluctuations are not an investor’s primary concern and it is inefficient to buy the coin (due to huge fiat currency fees).
Traders, on the other hand, are ever on the lookout for the short term fluctuations in Ripple prices. They buy when the price dips and sell when there is a marginal gain to capitalise on. If you choose to trade, you may purchase the coins on a broker platform, but you do not actually own them. Instead, you are trading on the market price, rather than being bogged down with the complex and technical operations with owning a cryptocurrency.
Simply put, the investor’s focus on keeping and collecting coins while the trader’s goal is solely on profit generation. The investor’s choice is rarely affected by temporary market changes. Nonetheless, whether you buy or trade on Ripple, you will be speculating either way.
In case you do not know the best option to start with, then try both. Keep it up for a while, and you will discover what you can handle; buy and hold, or trade. But remember, buying Ripple isn’t regulated by governing bodies, whereas, trading on a broker platform is. Bundle this with lighter fees, quicker transactions and a simplified buying/selling process – trading on a broker platform can really suit many people looking to get involved in the cryptocurrency market.
What are the Fees Involved in Buying Ripple?
Exchanges charge a fee on all the transactions you make on their platform. Therefore it is crucial that you study the fee system of any exchange or broker platform before opting for to buy Ripple on it. You should be careful and make sure not to fall for the ‘mob mentality’ and to choose the most popular because you haven’t done any further research. We’ve pulled together a small list of some of the fees that exist on both exchanges and broker platforms;
- Transaction fees: This is a small fee placed onto every single transaction to cover the costs of transferring Ripple from exchange to exchange. These transactions fees don’t exist on broker platforms.
- Deposit fees: These charges are simply a fee that an exchange levy on every deposit to its service. It varies from exchange to exchange and on the method of payment. Deposits using a credit card will attract different fees from deposits through exchange wallets or coin wallets. Not all exchanges
- Withdrawal fees: Most platforms charge you for withdrawing from their platform. The fees vary depending on the cryptocurrency and the destination. It is worth noting that most exchanges that charge low or zero deposit fees make up for the same in withdrawals or transaction fees.
- Spreads and commissions: They are standard charges on Contracts for Difference (CFD) trading platforms such as eToro, among others. The amount of fees vary from platform to platform. However, trading platforms do not charge commissions.
Broker Fees vs. Exchange Fees
Brokers and exchange have different fees structures. Exchanges make money through fees on deposits, withdrawals, and transactions on the platform. Consequently, they have a limit on the maximum amount that can be involved in a single transaction.
Brokers, on the other hand, sell their cryptocurrencies on a fixed rate and have no cap on maximum trade amounts. As a result, if you wish to buy a large amount of Ripple, then a broker will be your best bet.
Buying Ripple with USD
US dollars are the most popular fiat currency to use when buying ripple and other cryptocurrencies, nearly all exchanges that offer fiat transactions do accept USD as an option.
Likewise, brokers that you can buy ripple through also accept USD as their primary currency, making it very easy to buy using dollars. It also doesn’t matter where you are based because cryptocurrencies aren’t tied to any country or government, so as long as you have some dollars you will be able to buy ripple.
We’d always recommend you sticking to brokers due to the regulatory oversight they have, there is simply less risk attached to a broker than an exchange (however there is still risk associated to both given the volatility of the cryptocurrency market).
Our preferred providers to use when buying ripple with USD are: