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Forbes Advisor has provided this content for educational reasons only and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
Up in value by more than 75% since the start of the year, XRP is a cryptocurrency that runs on the Ripple XRP Ledger, a blockchain created in 2012 by Jed McCaleb, Arthur Britto and David Schwartz.
XRP can be bought as an investment, as a coin to exchange for other cryptocurrencies such as Bitcoin, or to finance transactions on the Ripple payments system which was created by Britto and McCaleb as an alternative to leading money-transfer network SWIFT.
What is Ripple (XRP)?
Ripple is a money transfer system akin to the popular SWIFT payments system used globally by some financial institutions. Designed as an alternative to SWIFT, it uses crypto technology to validate transactions. Ripple users spend XRP, its native cryptocurrency, to pay transaction fees on transfers.
Why buy XRP?
If an investor wants to use Ripple for its intended purpose, they’ll need to buy XRP to pay transaction fees on the network. Some people buy XRP to speculate on its price. XPR currently sells for 0.49p, but it peaked at £1.99 in January 2018. Since the start of 2023, XRP has gone up in value by roughly 75%.
How to buy XRP in 4 steps
- Choose a crypto exchange or broker
Both a crypto exchange and a crypto broker can be used to buy XRP, but the two are slightly different.
An exchange is a platform on which buyers and sellers can trade cryptocurrencies. A broker is an interface that interacts with exchanges on the behalf of investors.
Some exchanges only deal in crypto, so if an investor is new to investing and needs to use a fiat currency (sterling in the UK) to buy crypto, make sure to choose an exchange that accepts it.
If investors choose a broker instead, they should be aware of its rules around moving assets off a brokerage platform because some brokers don’t allow investors to move their holdings out of their account. If investors wanted to store their XRP in a crypto wallet for added security, this may not be possible.
FCA has a list of registered cryptoasset companies here
- Choose a payment method
Most exchanges let investors add funds to their account from their credit or debit card, bank account, crypto wallet or other payment service. Transaction fees may apply, and the payment method may have a bearing on the amount the investor will have to pay.
When using a credit card, the card issuer may treat it as a cash advance, which may be subject to additional fees and a higher rate of interest than a normal purchase.
- Buy your XRP
Within the chosen exchange investors can find the XRP currency and enter the amount they’d like to invest.
- Select secure storage
Unlike a bank account holding fiat currency, cryptocurrencies like XRP aren’t protected by the Financial Services Compensation Scheme (FSCS). This means investors would not be entitled to reimbursement if their XRP were stolen, they lost access codes or if the exchange or broker went bust.
A broker may give investors no choice about where their XRP is stored, but while an exchange may provide an integrated crypto wallet, they are free to store it in wallets elsewhere – whether ‘hot or ‘cold’.
Hot wallets are stored online, making them more convenient but also more exposed to hackers.
Cold wallets are external storage devices such as hard drives or solid state drives. They’re arguably more secure but if an investor were to lose their own access codes there may be no way to ever access their assets.
There may also be charges and fees for exporting XRP to an external wallet.
Some alternative ways to invest in XRP
Buying shares in an organisation which uses or owns cryptocurrencies and the blockchain that powers them is another way to invest in cryptocurrency. If the company is subject to regulatory scrutiny, an investor may feel this is a more secure way to invest.
Nvidia (NVDA), for example, is a manufacturer of graphics processing units which are used by cryptocurrency miners. Paypal (PYPL), meanwhile, allows users to buy and sell select cryptocurrencies.
Remember that Nvidia and Paypal are used for illustrative purposes and are not recommendations. Investing in publicly traded companies is no guarantee of making money or even recouping an investment. An online investing platform may be of assistance to get started.
Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.
Frequently Asked Questions (FAQs)
Is XRP safe to invest in?
Financial regulator, the Financial Conduct Authority (FCA) warns anyone thinking about investing in cryptocurrency they should be prepared to lose all of their money.
XRP is as volatile as any other cryptocurrency.
The UK government recently announced its intention to regulate cryptocurrencies in the same way that gambling is regulated, saying cryptocurrencies “hold no intrinsic value and serve no useful social purpose”.
With no regulation currently in place, consumers have no protection or recourse if the crypto exchange they use goes bust.
Therefore in principle, XRP is as safe as Bitcoin, Ethereum or any other cryptocurrency.
What are some of the easiest ways to buy XRP?
Crypto exchanges like eToro and Coinbase are among some of the easiest ways to buy XRP. Once an investor has set up an account and credited their account with fiat currency, they are ready to buy.
Getting started as a beginner via an exchange’s website or app should take no more than 30 minutes.
How is XRP used?
XRP is primarily used as a means to pay transaction fees on the Ripple network. Some people also use XRP to buy other cryptocurrencies, while others simply hold XRP to speculate on its value.
How does XRP differ from other cryptocurrencies?
XRP is designed to be faster, cheaper and more scaleable than comparable cryptocurrencies such as Bitcoin and Ethereum.
XRP transactions can be validated faster than Bitcoin and Ethereum transactions, which means more transactions can be validated within the same timeframe, making the Ripple network more scalable.
Transaction fees are also lower than Ethereum’s.
