Ripple's Great Opportunity: The Alternative Crypto Investment To Bitcoin And Ether

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Includes: COIN, GBTC
by: The Freedonia Cooperative

Summary

Ripple is the fourth most valuable cryptocurrency, and it has a lot of variation from Bitcoin, Ether, and Bitcoin Cash above it.

Ripple has shown how it can disrupt "wiring" and financial settlements in less time and a fraction of the price.

While the other coins' price falls on regulation and adoption news, Ripple is finding enterprise partners finding ways to utilize its disruptive technology.

As its use case increase, it will separate from consumer-facing coins and see an increase in price.

Bitcoin and Ether have been dominated headlines in the crypto world for much of 2017, except for the occasional article about smaller coins with insane value returns. It’s right for these two to share the spotlight (along with Bitcoin Cash, the Bitcoin spin-off that’s now #3 in total market capitalization among all crypto currencies and assets)—since together Bitcoin and Ether make up nearly 70% of the total market. Both, of course, have also had staggering growth in 2017.

But there’s evidence to suggest that both have hit their relative near-term ceiling, and as new investors flock to crypto (Coinbase for instance, may have added 100,000 users just last week), new coins will be looked at to be the “next” big risers. Ripple and Dash, two coins also in the top 10 in total market capitalization may just be those next coins.

The scenario is not that hard to imagine: if Bitcoin catches on as a form of worldwide value transfer (paper money) or as a backup to wealth (like gold or silver), blockchain technology-based coins can start to fill in other gaps. And that’s where a coin like Ripple fills in—ready to play its part in its own individual niche.

The best part though? Ripple can succeed with or without Bitcoin and Ether. It can succeed without mining technology or any changes in that, and it has a slew of big names behind it already. Ripple currently has 10% of the market cap of Bitcoin, but could be the first cryptocoin used by big business since it seeks to disrupt a current financial service (money transfers and settlements) while Ether seeks to create a new one (smart contracts).

What’s more, too, is as Chinese news has brought down the price of Bitcoin (and likely Ether and Bitcoin Cash as well), there have been no news of regulation of China and how its banks may use Ripple. Ripple has already worked out a partnership with China Central Bank.

What Is Ripple?

Ripple is the #4 most valued coin, with a current market cap of $6.5 billion and a price of about $.17. Its current circulation is 38 billion coins. Its coins go by the symbol XRP.

Ripple is meant for the niche of transactional fees and money/wealth transfer. As this site states,

The goal of Ripple is to be a global settlement network, a platform to allow anyone to transfer money in any currency to any currency in a matter of seconds. This is an ambitious goal meant to eliminate the use of older systems like Western Union (NYSE:WU) or SWIFT.

It’s also already been picked up by dozens of financial institutions and banks who see its ability to transfer money at a low cost as a competitive advantage, and an enormous advantage as more things turn toward the blockchain.

Lastly, unlike Ethereum and Bitcoin, there is no mining associated with Ripple. For some this may not much, and does not always dictate price, but changes in mining can and have had impacts on the price of all three coins valued above Ripple. As this site states,

Ripple is different than other cryptocuriences because all the 100 billion XRP that it’s possible to use on the platform already exist. While they’re not all on the market – a few are released into the market every month to avoid flooding – there is no use mining as there is nothing of value to be added, unlike in more traditional cryptocurrencies.

Partners See Huge Opportunity

Why? Well, as this article says,

The coin would be used to replace slow and costly transaction fees between banks/countries. With both real-time transaction settlement and low fees. The average exchange takes 3.5 seconds on the Ripple network today, with a current average transaction fee less than an American penny. On a dominant path to being the standard cryptocurrency based foreign exchange network, XRP is a fundamentally different token, unlike bitcoin or ether.

Lastly, there are already big-named backers for Ripple. Google was one of its investors in 2015. The next year saw investments from the likes of Andreesen Horowitz and other VCs as it raised $55 million (it did not take the ICO route that other coins have taken, positing it more as a traditional business and not on whim to the change in price of those investing with Bitcoin or Ether).

More positive outlook comes from this site, which explains,

The painful process of shipping cash home involves two main pain points. Firstly, a typical remittance transaction costs $5. Secondly, this transfer needs to be planned in advance, since it will take a lengthy two to four days to reach its destination, with many hiccups possible by the multiple third parties in between.
Ripple aims to change that, with both real-time transaction settlement and low fees. The average exchange takes 3.5 seconds on the Ripple network today, with a current average transaction fee less than an American penny.

Is It Overvalued Already?

The question now is if Ripple is overvalued at $.17 or not? We think it’s still undervalued. Ripple has already started to be explored by over 90 banks, but has not been put into the kind of use case that would see its XRP tokens being used in these transactions. Most partners seem to be in the exploratory phase of how Ripple can revolutionize transferring money, and utilization will drive value higher in this case.

Moreover, Ripple won’t need to rely on Bitcoin or another coin’s penetration into regular markets to be successful. Banks can begin deploying the technology on their own, massively reducing their own costs and utilize XRP as an exchange token to make these transfer happen. Consumer penetration will happen once a bank or service can offer the monetary transfer at a lower cost, displacing the long and arduous processing of “wiring”.

As banks continue to utilize blockchain technologies, Ripple is an early opportunity for them to use this disruptive force without needing to get past either governmental regulation (since it’s not seeking to replace the actual money transferred) and consumer confusion (on how to enter and how to use) as some other coins will face.

And as Ripple remains an enterprise solution, its adoption, when it comes, will be swift and sudden. It will not present banks with the need to change drastically (the way a Bitocin would) but rather to adopt. Said another way, it seeks to change the way we send money, not “burn it down”.

We see Ripple going up 2-3x in the next 6-9 months as banks will continue to sign on as partners and technological upgrades will allow them to start marketing their deployment of Ripple and XRP usage. And since we also see this being swift, we recommend keeping a watch on XRP price and any large movement upward to be a sign of a major breakthrough on the enterprise side. This could mean that the rest of the banking world is ready to follow—meaning significant gains as Ripple takes its place on the stage of world financial technology.

Disclosure: I am/we are long RIPPLE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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