How To Invest In Ripple
Looking to invest in ripple, the red-hot cryptocurrency that has skyrocketed nearly 21,000% in value over the past year?
Published on 24 January 2018
Ripple (also known as XRP) has been in the news recently because of the meteoric rise in its price over the past year. The cryptocurrency, which was trading at US$0.006368 on 1 January 2017, is now valued at around US$1.36. That’s an increase of about 21,000% in the span of a little over a year.
Why has XRP’s price skyrocketed? One reason could be the dramatic rise in the price the world’s most popular digital currency, bitcoin, which now trades at about US$10,800 per coin. That makes XRP seem like a bargain. But investors should remember that there are approximately 40 billion XRP in circulation compared to 17 million bitcoin.
Another factor behind XRP’s surge is the fact that the virtual currency – which was created and developed by San Franciso-based firm Ripple – has gained fairly wide acceptance among many of the world’s leading financial institutions. RippleNet allows the cross-border transfer of money in only a few seconds. The current system used by many banks, the SWIFT network, takes several days.
If the global banks switch over to Ripple’s blockchain technology, they will not need to maintain funds in foreign countries to facilitate their international transactions. Brad Garlinghouse, Ripple’s chief executive officer, says that the big banks would free up an estimated U$5 trillion currently held in these “nostro” accounts.
However, a recent article in the Financial Times points out that XRP “plays little part in Ripple’s central business case. For the most part, it’s just a cute add-on”.
While the debate over ripple’s viability and usefulness rages on, many investors have been cashing in on the virtual currency’s remarkable rise in value.
If you think that ripple is a good investment and would like to buy the cryptocurrency, there are several exchanges through which you can invest in it:
You can use euros, US dollars, or bitcoin to buy XRP on Bitstamp. The first step is to open an account. Subsequently, you will have to undergo a verification process that will involve submitting documentation to prove your identity.
It is advisable to opt for the exchange’s two-factor authentication process. If you do this, you will not be able to access your account merely by entering your password. You will also have to key in a time-based PIN that will be sent to your smartphone.
When you have logged into your account, you can make a deposit to pay for the XRP that you plan to purchase. The deposit can be made from an EU bank, an international bank, or a credit card. Remember that it could take some time for your funds to be available and that you may have to bear some charges.
For example, if you make an international bank transfer, you will have to bear a deposit fee of 0.05% of the amount. This sum is subject to a minimum of US$7.50 or EUR7.50. The credit could take between two and five days to appear in your account.
You will receive an email when the funds are credited. Now you can go ahead with your XRP purchase. Simply enter the amount that you want to invest. The screen will tell you the XRP units that you will receive. Click on the “buy XRP” button and the transaction will be completed and your purchase added to your XRP balance.
Remember that you are dealing with an exchange. Bitstamp is not selling you the XRP. It is merely acting as the market that matches buyers and sellers.
Kraken is the second exchange listed on Ripple’s website after Bitstamp. This San Francisco-based firm was established in 2011. The procedure for opening an account and buying XRP is similar to the procedure that you have to follow at Bitstamp. You need to enter some personal details, get your account verified, transfer funds, and make your purchase.
The verification process at Kraken is divided into five tiers. Tier 0 requires you simply provide your email address. But it merely gives you access to the site. You can’t enter into any transactions.
For a Tier 1 account, you need to provide your name, date of birth, country, and phone number. Your trades are restricted to digital currencies in this type of account. Tier 2 requires you to provide your address as well and allows you to use fiat currencies.
Tier 3 and 4 are similar to Tier 2, but provide funding limits allowing you to enter into leveraged trades. For these accounts, it is compulsory to furnish a government ID as well as a recent proof of residence.
This is a third exchange that is listed on Ripple’s website. The application process requires you to upload an identity document, preferably your passport. You also need to provide a proof of address. This can be a bank statement that shows your name and address and an issuing date that is not more than three months old.
GateHub’s verification process takes up to five workdays. But identity verification is not necessary for using your cryptocurrency wallet on GateHub. However, any transaction involving your bank account requires you to undergo the verification process.
The exchange provides you with a virtual wallet. The GateHub wallet allows you to manage your XRP and enter into buying and selling transactions. It is necessary to deposit at least 20 XRP to activate your wallet.
In August 2017, GateHub’s deposit processing service was hacked. Criminals managed to steal only US$5 million as the bulk of the funds were held offline. The exchange has clarified that customer balances were not affected and all transactions on GateHub have been honoured in full.
There are a number of other exchanges where you can buy XRP. The list includes coinone, Bitso, Coincheck, Korbit, and a host of others. Ripple is not available on Coinbase, the largest exchange in the US. Coinbase recently clarified that it had no intention of adding ripple to the list of cryptocurrencies that can be traded on its platform.
Is an investment in XRP likely to give you high returns or will you lose part, or even all, of your money? The cryptocurrency’s price has been on quite a rollercoaster ride so far this year – plummeting 46% during one trading day and then, a few days later, skyrocketing 50% during a single trading session.
To understand the level of risk involved, consider the following scenario. Say, you invest U$25,000 in ripple. That amount will get you 18,382 XRP at current rates.
If the market rate falls to the level at which it was at the beginning of 2017, your investment will be worth US$117. Is that a risk that you are willing to take?