Ethereum and Bitcoin are the biggest cryptocurrencies based on market cap but the third on the list, Ripple, is one that stands out among crypto enthusiasts because it is different than the other two, and most cryptocurrencies for that matter. Ripple trading can be profitable and is attractive because of the CFD trading possibility, among others.
A Quick Analysis Of Ripple
Ripple can be described as 3 in 1: a company, a cryptocurrency (commonly referred to as XRP) and a processing system for digital payments. While XRP is similar to bitcoin, the blockchain system is different, with the entire currency being owned by a company, as opposed to bitcoin, which is mined.
XRP stands out since it was created in order to make transactions more convenient and faster for banks. This cryptocurrency is simply more popular for the larger financial institutions.
Ripple, the company, owns around 60 billion XRP, with 55 billion being put in escrow. The system allows the company to sell a maximum of 1 billion per month. This number is rarely achieved.
RippleNet is the blockchain system of the cryptocurrency. It offers financial institutions and businesses different programs that aid with cross-border payments, like xCurrent, xRapid and xVia. Because of these systems, Ripple managed to get many clients that use the blockchain system created, ranging from small banks to larger financial institutions. American Express stands out as a trustworthy example, as it announced a partnership allowing limited blockchain payments made from businesses in US towards businesses in UK.
XRP – The Cryptocurrency
Ripple’s digital asset, XRP, is meant to settle payments in just 4 seconds, with the system being able to handle up to 1,500 transactions per second. Similarly to other cryptocurrencies, there is a finite number of coins created. With XRP the maximum is 100 billion, which already exists, with 60% being directly owned by Ripple.
XRP and Ripple in general, are different than what we normally see in the crypto world since it is not often used as a regular currency. XRP tends to be used when someone wants to exchange a fiat currency to another fiat currency, as mid-transaction liquidity.
Ripple Vs Bitcoin
Ripple is different in some ways. It does sell itself with ease, mainly because of transaction speeds. This is really important since with bitcoin, if a transaction lasts too long, because market fluctuations can be large, as the transaction is finalized, you receive a different BTC amount than what was initiated. With Ripple this concern simply does not exist.
Bitcoin is completely decentralized but Ripple sells services to financial institutions and banks. The biggest part of the XRP volume is owned by one company, so the cryptocurrency is centralized.
Basically, the purposes of bitcoin and ripple are completely different, one may say opposites. Bitcoin tries to create a new financial system but Ripple created a digital token that helps with transfers of assets, trying to assist the financial systems and upgrade worldwide transaction capabilities.
Buying bitcoin is much more convenient than buying ripple since there are not many options available for those interested in buying XRP. From time to time we see exchanges that allow users to buy XRP for USD, but this does not often happen.
With many of the crypto exchanges that sell XRP, like Binance and Coinbase, the requirement is to use a cryptocurrency like ether or bitcoin as you buy XRP. An account and a wallet will be needed to get XRP, but this should happen really fast after the transaction is initiated.
Trading Ripple CFDs Vs Buying And Selling Ripple
Ripple trading is highly attractive for crypto enthusiasts because of transaction speeds. You can act as soon as you see an opportunity as a trader. However, buying and selling XRP is not as convenient as you might first think. You need to add your XRP in an account with a cryptocurrency exchange. Then, there is no guarantee that you can actually trade XRP since this can only happen when someone is interested in buying what you sell, and vice-versa.
Good news comes from trading Ripple CFDs (learn more about CFDs here). EasyMarkets makes this a breeze and is now used by many that want to take advantage of market fluctuations as they happen. As you trade Ripple CFDs you can initiate buy or sell trades in an instant since the CFDs allow trading the cryptocurrency without actually holding it. You can thus quickly take advantage of both the fall and rise of Ripple.
The second really important advantage of using Ripple CFDs is that you can initiate trades with leverage. If you just hold XRP, this is not an option. Leverage is vital for the short term traders as it allows them to open larger buy or sell positions. Obviously, this does mean that stop loss tools need to be used in order to properly manage risks, as in Forex trading.
Last but not least, trading Ripple CFDs means you can take advantage of XRP price falls, which is not the case when just holding XRP, where you can only make money as the value of the currency increases.
While most people stay focused on the two largest cryptocurrencies, bitcoin and ether, and tend to be attracted by decentralized cryptos in general, Ripple instantly stands out, especially for seasoned traders and investors. This is because of the CFD opportunity and because of the different nature of the cryptocurrency.