Is Ripple a Good Investment Target?

"It's basically like a Bitcoin but for like banks or something right?"

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The above statement is generally the extent of how much many cryptocurrency investors know about Ripple. For having the third highest market cap, many people still know surprisingly little about Ripple XRP or the potentially industry-shaking business that is Ripple.

If you find yourself in this category, don't fret. You're not alone, nor is understanding what Ripple does too far out of reach.

When it comes to exciting cryptocurrencies, the average investor is usually drawn to volatility. A sudden atmospheric surge in price for a random altcoin usually makes headlines, regardless of how viable an investment target that coin is.

Whereas some coins such as Monero and NEO multiplied in price, Ripple stayed relatively quiet. It still held onto being in the top 5 most popular coins, but it was just not exciting to watch. This led a lot of people to forget, or otherwise neglect to understand, what Ripple is trying to accomplish.

The opportunity Ripple is trying to seize is based on the inefficiency of the current global payment industry. The world sends roughly $155 trillion across borders, and this $155,000,000,000,000 (that's a lot of zeros) is chipped away at with high fees and lengthy processing times. If you've seen a chunk of your payment from an international client go missing to fees, multiply that to an almost incomprehensible amount of money.

October Growth

The recent and unexpected spike in price signaled a bull-run in a time where altcoins were generally down double-digit percentages.

The reason XRP saw some growth in October is largely due to the belief that Ripple is going to make a big announcement at their upcoming conference in Toronto called "Swell". Traders are buying into XRP with the hope that the price will continue to grow after the conference. If anything, this should be a red flag. Anticipation has already been built into the current price, and if the conference is underwhelming, we'll likely see a drop in price.

Other than the conference, Ripple has been expanding into Asia by opening offices in India and Singapore. Additionally, Ripple announced that RippleNet (their enterprise blockchain network) added its 100th member.

Is Ripple a Good Investment Target?

And so we arrive at the point that any keen investor has been asking themselves since the beginning of the article.

It's important to emphasize that I am only providing you with information to help your decision and not financial advice.

"First a clarification on the question: Ripple is a private, cash flow positive company and we don't have any plans to raise additional capital

As a general rule I try not to give investment advice, but I'm happy to give a summary of what drives Ripple's and XRP's value. Ripple is focused on enabling a global network of financial institutions to use our software to create what we call the the Internet of Value. Our goal is to lower the marginal cost of international payments to the point where money can move as easily as information does today.

As the network grows and adoption of Ripple's products increases, the value of Ripple should grow as well.

As this occurs, the demand for XRP will increase and markets will reflect that."

That being said, while Ripple is attempting to tackle an enormous problem and is perhaps the best-suited company to do so, there are some major drawbacks (in my humble opinion) investing in it for the long-term.

The Cons

1. Ripple (XRP) is not decentralized. Ripple, the holding company, owns about 61% or $16 billion worth of all the XRP. This means that they can release their XRP to have some control on prices. Since they have an enormous holding supply, this would only make the price go down unless they choose to buy XRP tokens back, which they haven't shown any intentions to do.
2. Ripple is all about low payment fees. That's their edge over the current global payment system. It's not in their best interest for XRP tokens to be worth a lot since that would increase the cost per transaction. Bad news if you're looking for massive gains.
3. There are 38,600,451,446 XRP in circulation, with a market cap of $9,983,659,362. There is also currently a maximum supply set of 100,000,000,000 XRP. The sheer supply curbs the growth potential. We're likely not going to see a single XRP token follow a similar growth pattern of a NEO token (currently trading at $29.51).

The Pros:

1. Ripple is one of the few companies in the cryptocurrency world that is making money and is working with actual clients. It's pretty much an anomaly in a market full of tokens with only a whitepaper to their name.
2. The global payments industry is worth trillions.
3. The reason many big banks will have a lot of difficulty making their own Ripple spin-off is because they're inherently self-serving and centralized. For example, Banko Alex has no incentive to adopt the primary usage of a Banko Moskov coin. These banks are stuck in a conundrum in having to create a decentralized coin while still maintaining control. Ripple serves as an objective third party intermediary that has only one primary objective: to facilitate global payments and earn revenue in doing so.

Final Thoughts

For me, Ripple has always been an interesting coin to watch. My interest is largely fueled by a frustration with the archaic global payments industry, and that aligns me with Ripple's opportunity.

A few questions you should be able to answer prior to investing in any cryptocurrency include:

• What problems are they solving?
• Are they building something useful?
• What is their industry like (size, competitors, etc)?
• Do they have a competitive edge?
• What's their founding team's experience?
• How many tokens are released, or plan to release in the future?

If you're interested in Ripple, I highly recommend following their three-day conference Swell. Two of their keynote speakers include Ben Bernanke, the former chairman of the U.S. Federal Reserve System, and Tim Berners-Lee, inventor of the World Wide Web. There's a reason so many people are awaiting the conference with anticipation, and it's largely to hear what these two speakers think about the current state of Ripple and the blockchain world.

I also recommend checking out how Brad Garlinghouse (CEO of Ripple) answered a variety of questions pertaining to Ripple as a company and its growth potential. The full series can be found here.

As far as investing, that decision is up to you. Either way, Ripple will be an interesting story to follow.

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