December 29, 2020

Why is the XRP price so low? Advantages and disadvantages of the token

Why is the XRP price so low? Advantages and disadvantages of the token

Ripple is a very popular cryptocurrency. It takes second place between Bitcoin and Ethereum. This coin has some advantages and disadvantages in comparison to them. Ripple is such a famous cryptocurrency, that it is included in the list of payment methods of the most famous electronic payment systems such as Neteller and Skrill.

Let’s describe this coin in detail, all its advantages and disadvantages.

Why is the XRP price so low? Advantages and disadvantages of the token

General information about this coin

Ripple is one of the oldest cryptocurrencies. It was created in 2012 when digital money was only becoming popular. It had a lot of advantages in comparison to Bitcoin, but some people consider them as disadvantages. Due to this, Ripple isn’t an ideal investment.

What are the main features of this coin?

  1. High level of centralization. Ripple was created to make intermediary services more convenient. This is a coin created for banks.
  2. Speed of one transaction is 4 seconds. It is significantly higher than any other digital coin. To compare with bank payments, it works almost at the speed of light.
  3. Ripple isn’t just a coin. It is a full infrastructure.
  4. Verification is done on special servers.
  5. All money is premined. Thus, you can’t earn Ripple using mining.

Most often, we compare Ripple with Ethereum because they are almost in the same ranking place. There are a lot of differences between these cryptocurrencies. Some of them are advantages and some are disadvantages. We can’t certainly know what the positive sides are and what the negative because even experienced people don’t know it. Let’s describe these differences:

  1. Ethereum has better personal data protection.
  2. Ethereum can be used for creating smart contracts.
  3. Ethereum is an infrastructure that allows one to buy usual financial and investment assets and earn money.

Naturally, these differences are likely to be advantages in comparison to Ripple. However, you should not make such strong conclusions because there are a lot of advantages that Ripple has in contrast to all other cryptocurrencies.

Ripple advantages and disadvantages

Why is the XRP price so low? Advantages and disadvantages of the token

Ripple is a great cryptocurrency thanks to these positive sides:

  1. Fast transactions. As we said above, one transaction takes only 4 seconds. To compare with other payment methods, the duration of the transaction cantake hours. Banks take 3-5 days for one operation.
  2. Less volatility. Ethereum depends very much on the stability of the system and a lot of other factors. For example, a bug in the Ethereum blockchain was strongly felt. Less volatility is a great advantage of Ripple because this cryptocurrency is more attractive for traders and investors who want to invest their money without huge risks associated with Bitcoin, Ethereum, and other volatile cryptocurrencies.
  3. Low commissions. Ripple probably has the lowest rates among all existing cryptocurrencies.
  4. There are a lot of coins that were produced. The number of coins is more than 100 billion XRP.

At the same time, we need to understand that the number of disadvantages is also very big. That’s why the XRP price is so low now. More and more traders and users don’t like this coin and a lot of experts say that it is a scam. How accurate this information is, we will understand within some time. Now, let’s describe the disadvantages of this coin:

  1. It provides effective instruments for intermediaries such as banks and payment systems. However, the cryptocurrency community wants to remove the third person from any order.
  2. High level of centralization is one of the reasons why this cryptocurrency isn’t a very good choice to invest in all the moneyyou have. If a centralized system crashes, XRP will lose value immediately.

That’s why you need to be careful when trading this cryptocurrency. If creators of the platform decide that they want to leave with users’ money, they can do it easily.

To sum up, the Ripple payment system is very different from other cryptocurrencies. It can’t be called a classical digital token because it doesn’t have most of the advantages of Ethereum and Bitcoin, such as decentralization, the ability to use smart contracts, create decentralized applications, and many others.

At the same time, we can’t say that it isn’t an interesting financial asset. Yes, it is very risky, but it is a good idea to invest a small part of your investment portfolio in it.