Don’t Put All Your Eggs in One Crypto
Part of good, sound investment advice is usually to diversify. For those that invest in crypto-currency, it’s sage advice. The typical investors in crypto that I’ve encountered all fall into one of several categories, but each has one thing in common – they are risk takers.
A recent survey discovered that, as you’d expect to see, the demographic points to relatively younger men – those that are looking for higher-risk investment returns. 1
Investment risk-taking is great – it’s what keeps the dream alive for a lot of new technology that’s now attempting to enter the crypto space. Buyers are making their bets on a variety of opportunities, including the ICOs for new crypto-currencies.
But when it comes to reducing the risk of an entire portfolio, there is no better strategy than to study what the future is most likely to bring for each opportunity:
- Does the technology anticipate a trend or is it just following and responding?
- Does the technology have a lot of competitors that can do the same thing?
Both of these questions should reveal much about your choices. And when it comes to XRP, your investment is pointed squarely at the future of payments.
XRP is the Ultimate at Doing Payments
When you make an investment in XRP, you are making an investment in a company which has publicly stated that their intentions for the crypto-currency. Miguel Vias (Ripple Head of XRP Markets) recently stated:
“XRP…. is primarily designed for cross-border payments. The value derived from usage of value transfer across borders.” 2
So good is Ripple at payments, that it’s not only just about cross-border transfers of value to some customers; the Ripple banking consortium in Japan is interested in using Ripple for processing domestic payments as well. 3
To say that XRP is the best crypto at doing payments is almost like staring at the sun and saying “wow that’s the brightest star in the sky!” For those of us that have already discovered the performance metrics associated with how fast XRP can do payments compared to any other crypto-currency, it has been an impatient wait for the market to catch up and smell the coffee.
It’s not just that XRP is fast –it’s that it’s so much faster. It can process 1,500 transactions per second. Bitcoin’s top speed on a good day is approximately 6 transactions per second. 4
Oh, so you say you’ve purchased some ETH? Yes, I know they do smart contracts, but I’ve got bad news when it comes to confirming payments head-to-head with XRP. While Ethereum payments take three minutes to confirm with a minimum of twelve “blocks”, Ripple’s ledger closes with absolute confirmation in four seconds. 5 6
Anticipating New Markets
Ripple has anticipated a massive market for micropayments, and has set up payment channels to specifically support a massive growing market for cheap micropayments. 7
While the market for micropayments today is small-to-medium size, experts have long predicted its ascension to the top of financial technology’s stack of products. Enabling micropayments to support entire new industries will drive enormous XRP demand.
XRP is the Most Connected Crypto
Ripple purposefully pioneered – and continues to champion – ILP. The Interledger Protocol’s goal is to connect up many diverse ledgers together, linking them into one giant “Internet” of payment networks using a standardized payment protocol. 8 Once each of these networks can talk the same language using an ILP plugin, the market for its own native currency – XRP – becomes that much larger.
This is the type of forward thinking that we’ve come to expect as a normal course of business from one of Silicon Valley’s top fintech stars.
The Future of Ripple: The Company
Recently on XRPChat, there was an animated discussion about the possibility that Ripple – the company that made XRP – might “go public” or pursue some other form of merger. Ripple is the only US-based company that is in the top three crypto-currencies. This gives it both disadvantages and advantages when compared to Bitcoin and Ethereum, the other two members of the ‘top three.’ 9
Yes, as a US company, it has to carefully adhere to AML and KYC mandates, and also any money transmitter laws for all fifty states. Nonprofit foundations based in Switzerland can play much more loose with their promotion of crypto-currency.
But… as a US company, there are also possibilities that don’t exist for Bitcoin or Ethereum; neither the Bitcoin foundation nor the Ethereum foundation has dependable future streams of income to power adoption of their respective crypto-currencies.
That is not the case for Ripple. Now that Ripple is approaching what is considered to be a “mature” stage for a Silicon Valley startup, there are several very exciting options for raising funds to power them into the next level:
- Pursuing a Purchase by a Larger Company (Google, et al)
- Private IPO
- Public IPO
All of these speculative possibilities are very exciting, and in my opinion would catapult XRP price forward by a massive amount just on the announcement alone.
Ripple has been vocal about reminding the market that it is profitable on its own at present and doesn’t need these traditional types of capital infusions; as Dilip Rao (Ripple Managing Director) noted in a recent presentation, “We aren’t going to run out of money any time soon.” 10
The Future is So Bright…
You know what to do. You are a crypto-currency investor; you are typically a risk-taker compared to other traditional investors, but even risk-takers should look to diversify their portfolio with the “safe bet” and know when to double-down.