What is Common Between Ripple Technology and XRP Token?
In this article, we will focus on the project, which has recently taken the second place in the cryptocurrency rating. Today we will talk about how XRP token is connected with the famous Ripple technology, which should make a revolution in banking sector in the future. 1. Briefly about Ripple cryptocurrency The Ripple project is in no way just another copy or an improved Bitcoin`s version. The only thing that unites these two coins is the blockchain technology. Let's clearly define what the Ripple is:
- There is a system of gateways at the heart of the Ripple network, the performance of which is provided by hundreds of servers. Ripple works through distributed registry technology, but its architecture is completely different from the standard blockchain. The project does not have decentralization, since only those servers that have been approved by the company, are involved in transaction validation.
- The main task of the project is to ensure a free and fast exchange of assets with minimum fees (0.00001 XRP).
- The target audience of the project is banking institutions, which can save about $3 for each transaction with the help of Ripple technology. If we consider, that large banks spend millions of transfers per year, this leads to significant savings.
2. What positions does Ripple take now?In mid-November 2018, the entire cryptocurrency market collapsed sharply. Many coins lost 40-50% of their value in a week. In this situation, XRP token showed relative stability and fell by about 20%. At the same time, Ethereum fell substantially in price. Because of this disbalance, Ripple took the second place in the cryptocurrency rating. For the moment of writing this article, the project`s capitalization is equal to 12.5 billion dollars. The gap from ETH is almost 3 billion dollars.
3. Future forecastsLet's talk briefly about prospects for this project, and what XRP hodlers can expect. For a start, it is worth noting that Ripple is a legal entity officially registered in the United States. This is an undeniable advantage for investors. But it should be understood that the Ripple technology used by banks has nothing to do with XRP token. The fact is, that Ripple has three different products (xCurrent, xRapid and xVia). Banking institutions are interested in the first one, and XRP token is directly related to the second one. Therefore, there is no direct correlation between XRP token rate growth and the introduction of Ripple technology into the banking sector. Some experts say that banks can start using xRapid technology. If this happens, then XRP token will be really useful and needed. But if you go a little deeper into this question, it becomes clear that such a scenario is highly unlikely. In this case, banks will have to buy an intermediate XRP token additionally, which will increase the cost of transactions. Therefore, the vast majority of analysts believe that banks will not take such a step.
But there are still some reasons for token`s price increase:
- The possibility that banks will shift to xRapid technology. It is unlikely, but still possible.
- Increasing of customer base.
- Regular burning of tokens (deflation).
- Expanded applications (using Ripple technology, you can exchange absolutely any assets).
- A general trend change on the market, may lead to another sharp rise in the token price.