Is Ripple (XRP) Still a Good Investment in 2023?

Compared to Bitcoin, XRP (also known as Ripple, its parent company) is not as well-known to the average person. But you’ll be surprised to know that XRP remains one of the largest cryptocurrencies by market cap, even after going through all of the hurdles of an SEC lawsuit.

Before 2020, XRP token’s future seemed bright and on the right growth trajectory. However, the cryptocurrency took a beating when the SEC charged Ripple with offering XRP tokens as unregistered securities to the public in 2020. 

Despite its bumpy ride in the crypto market, Ripple is still building blockchain solutions to facilitate fast cross-border payments. 

However, the question remains: Is XRP still a good investment in 2023? Let’s find out. 

Key Takeaways:

• Despite the SEC lawsuit and regulatory uncertainty, Ripple's XRP remains one of the largest cryptocurrencies by market cap.

• XRP's technology enables fast and cheap transactions, with the backing of major banks and financial institutions.

• The outcome of the SEC case will heavily impact XRP's future, but if Ripple settles the lawsuit, it could lead to a significant price rally.

What Is Ripple (XRP)?

Ripple’s open-source technology focuses primarily on both a digital payment and currency exchange network to process financial transactions. 

The technology facilitates fast exchanges to different forms of currencies and gold through the use of a peer-to-peer (P2P) decentralized concept. This eliminates potential settlements later between mainstream financial institutions.

Its native token (XRP) is pre-mined, with a supply of 100 billion, and serves to facilitate cross-border currency transfers through the Ripple network. 

As is the case with its fellow altcoin, Ether (and its parent company, Ethereum), many people get the name of the digital currency mixed up with its parent network. In the case of the XRP token, its network is Ripple, an open-source protocol (developed by Ripple Labs, Inc., more commonly known simply as Ripple).

The technology was released in 2012 by its co-founders, Chris Larsen and Jed McCaleb. Ripple’s ultimate goal is to create a fast and seamless payment solution and remittance system to replace the traditional SWIFT system used for international money and security transfers.

How Does XRP Work?

Currently, settlement systems for transactions, such as SWIFT and PayPal, generally use U.S. dollars as a common currency for conversion. This incurs money and time. Ripple uses XRP as a mediator that settles almost instantly at a fraction of the cost via RippleNet, a liquidity solution that’s been developed to make lengthy and expensive transactions a thing of the past.

As Ripple puts it:

International payments, especially in emerging markets, require businesses to hold pre-funded accounts in destination currencies. It’s a costly endeavor that ties up resources.

RippleNet provides an alternative. While any financial institution on the network enjoys reliable, instant and lower-cost transactions, those who use the digital asset XRP to source liquidity can do so in seconds — freeing up capital and guaranteeing the most competitive rates available today.

XRP Use Case Example

Tom in the U.S. wants to send $1,000 to Rachel in Asia. Traditionally, this has involved going to the bank and filling out various forms. After that, it would take up to three days for the transfer to go through, costing perhaps $10–$20. This is because of the liquidity costs for the financial institutions administrating the exchange. Pre-funded nostro accounts are necessary on either side of the transaction to exchange the currency (in Tom and Rachel’s case, from USD to GBP). 

Holding these accounts entails liquidity costs for the bank, costs which are ultimately passed on to Tom. However, if this payment were made using XRP on the Ripple network, the outcome would be considerably more favorable for Tom. Ripple’s payment protocol obviates the need for pre-funded Nostro accounts. Instead, the bank can transfer USD to XRP and then XRP to GBP at a fraction of the time and cost. Ultimately, Tom saves three days and $20 in processing fees, as the Ripple network only requires about 10 seconds to process the transaction. 

The fee on the Ripple network will be less than $0.01, though the bank may set a fee — which will still be nowhere near a traditional bank transfer fee.

How Is Ripple (XRP) Different From Other Cryptocurrencies?

XRP is indeed an altcoin, but it differs significantly from Litecoin (LTC), ETH and Stellar (XLM) in its technology, concept and execution.

XRP Doesn’t Use a Blockchain

Unlike Bitcoin and other cryptocurrencies, XRP doesn’t operate on a blockchain. Instead, Ripple uses its unique technology, the Ripple Protocol consensus algorithm (RPCA). Its distributed consensus verifies transactions on the network.

For example, a participating node can verify the authenticity of a transaction without a central authority by using a poll. It works similarly to a blockchain, though, in that there has to be a consensus in order for transactions to be verified on the network.

XRP Is Decentralized

Despite the debate as to whether or not XRP is centralized, XRP is, in fact, decentralized. Ripple uses a decentralized P2P structure, relying on nodes to process transactions through a voting system. Although the network doesn’t operate via blockchain, its consensus protocol is similar. However, its system uses a negligible amount of energy as compared to Bitcoin.

You Can’t Mine XRP

XRP cannot be mined. Although there’s a limited supply of the currency, XRP isn’t created through the actions of miners. Instead, it’s pre-mined and has been capped at 100 billion tokens. As of June 2023, almost 52 billion tokens are in circulation. The remainder of the XRP tokens are released periodically by Ripple from escrow.

What’s Happening With the Ripple Lawsuit?

In December 2020, the SEC issued a press release charging Ripple Labs and its two top executives with raising over $1.3 billion without first registering it as a security with the regulator. 

There has been much controversy about the lawsuit, focusing on whether XRP is a security or simply a cryptocurrency. If it is security — as the SEC alleges — then it must be registered with them as one. The SEC has never classified the top two cryptocurrencies, Bitcoin and Ether, as securities. However, they are decentralized, and not owned by one entity. This is not the case with XRP.

Ripple has fiercely contested the charges, stating that XRP doesn’t constitute an investment contract, and that it should be considered a digital currency, as it’s only used to facilitate cross-border payments on the platform. 

In April 2023, SEC Chairperson Gary Gensler failed to answer whether XRP was a security or not during a congressional hearing. 

In May 2023, a U.S. federal judge denied a motion by the SEC to seal internal documents containing a speech by William Hinman, former director of the SEC’s Division of Corporation Finance. This decision was seen as a win for Ripple.

Now, all eyes are on Judge Torres, as people await her historic ruling on this long-running case (the date of the judgment is unknown as of now).

XRP Price History

Since launching in 2013, XRP has seen some wild price fluctuations. Up until 2017, its price had barely managed to reach $0.01. But in March and April of that year, its value rose significantly. By the end of April 2013, its price was up to $0.05, and it didn’t stop there — not by a long shot.

By the end of May 2017, XRP’s price was up to $0.25. It retraced slightly in the coming months but took off as 2018 dawned, just as other cryptocurrencies (most notably Bitcoin, which peaked at nearly $20,000) did at this time in the infamous crypto bull run. Its price peaked at $3.84 on Jan 4, 2018. 

Within two weeks, however, XRP had lost more than half of its value, and by early 2019, it was priced around $0.30. In late 2020 it went on a bull run, hitting nearly $0.70, but then crashed due to the uncertainty over the SEC lawsuit. (Since then, its price has stabilized somewhat, hovering around the $0.55 mark at the end of March 2023.)

In early April 2021, XRP’s price shot past $1 for the first time since 2018, nearly hitting the $2 mark. By mid-May, it was still hovering around $1.50, after which it retraced to $0.60 in July, finally closing the year at around $1. Following the onset of bearish market conditions in 2022, XRP began a price decline. Its price fell below $0.50 by May. 

However, XRP’s price rose at the beginning of 2023, hitting a peak of $0.54 on Mar 30 and trading sideways since that time.

XRP Price Prediction

As of Jun 5, 2023, XRP’s price was $0.53, an 84.22% price drop from its ATH of $3.40 in Jan 2018, and a 19,000% increase from its low of $0.0027 in May 2014. 

PricePrediction’s forecast for XRP in 2025 is cautiously bullish, predicting it could hit $1.63 and cross the $10 mark by 2030. Similarly, price analysts at Crowd Wisdom offer price predictions for XRP of $1.80 in 2025 and $7.50 in 2030. 

The question on most investors' minds is: How much will XRP be worth if Ripple wins its SEC case? While nothing is guaranteed in the world of crypto, if the SEC case ruling tips in Ripple’s favor, XRP’s price could possibly exceed its ATH of $3.40 and even reach the double-digit mark of $10. 

Furthermore, in favorable bullish market conditions, the XRP price could potentially hit $20, $30 and even $50. However, these price predictions should be taken with a pinch of salt. 

Factors Affecting XRP’s Price

Various factors could influence XRP’s price, as follows.

Inclusion of Ripple as a Mainstream Payment Protocol

Ripple Labs, the company behind XRP, is working hard to help the world recognize its product as a key payment protocol for global transactions. 

Through strategic partnerships with traditional banks, organizations and various enterprises, Ripple is making strides toward becoming a key player in international money transfers. Official recognition as a safe, secure and fast cross-border payment provider could cause XRP price to skyrocket.

SEC Case

The lengthy lawsuit between Ripple and the SEC has taken a toll on XRP’s price. Since the case started, there’s been barely any momentum behind XRP, with various investors losing interest in the project. 

If Ripple wins the case, XRP’s price could rally and get on track in terms of recovery. However, an unfavorable outcome could lead to a crash and the possibility that XRP’s price may not recover. 

Government Regulation

Recently, there's been increasing talk regarding government regulation of the crypto industry. Policymakers and financial authorities are looking for ways to regulate cryptocurrencies, which experts believe could lead to further price drops. 

Tightening government regulations would negatively affect not only XRP’s price, but that of other cryptocurrencies as well. 

That said, the above sentiments don’t constitute financial advice. We highly recommend you do your own research before investing in XRP or any other altcoins.

Is XRP a Good Investment?

The financial world is unpredictable. Every investment has its fair share of ups and downs, and digital assets like XRP are no exception.

Ripple's future is currently questionable, due to the lawsuit with the SEC and large-scale loss of investor interest in the cryptocurrency. However, should XRP be able to settle this lawsuit, it can create an even stronger bull run.

The SEC case aside, Ripple has been aggressively working behind the scenes to strengthen its brand and enrich its ecosystem with strategic partnerships. 

In May 2023, Ripple launched a platform dedicated to the development of CBDCs and stablecoins. The network has also been expanding in Europe and the Middle East to provide enterprises with crypto-enabled payment options and on-demand liquidity. 

Thus, XRP is an excellent choice for a thematic investor who buys digital currencies based on a top-down investment approach to diversifying their portfolio.

However, we must recognize the legal risk associated with XRP because an adverse outcome in the SEC case could negatively affect its price. 

As an investor, please consider the pros and cons of investing in XRP discussed in the section below.

The Pros of Investing in XRP

Some of the benefits of investing in XRP are as follows.

Fast and Cheap Technology

XRP’s technology allows for almost instantaneous, negligibly cheap financial transactions (costing less than $0.01). It has tremendous scalability, and can process 1,500 transactions per second — which is over a thousand times faster than Bitcoin.

To demonstrate, in October 2018 TechCrunch founder Michael Arrington allegedly sent $50 million in XRP, and it “took like 2 seconds and it cost 30 cents.” Impressive, no matter how you look at it.

Backing by Large Banks

For these reasons, XRP has gained the backing of many multinational banks and financial institutions, such as JPMorgan Chase, Santander Bank and Bank of America.

Notably, in June 2019, a strategic agreement was signed between Ripple and global money transfer giant MoneyGram®. Potential investors will interpret such agreements as an indication that XRP is going places. 

Strong Company

As with any cryptocurrency, when you invest in XRP, you’re not just investing in the currency; you're investing in the company. Ripple Labs, Inc. has over 500 employees, whose work ranges from promotions and marketing to technology. If the company continues growing and does well, XRP will surely follow suit.

The Cons of Investing in XRP

On the downside, some of the reservations about investing in XRP include the following.

Debate on Centralization

Some still see XRP as a centralized banker's currency, sparking a crypto community debate. The fact that Ripple cooperates with financial institutions contradicts Satoshi Nakamoto's reason for creating Bitcoin in the first place: the desire for a decentralized currency, away from the control of banks.

In response to the concerns about centralization, Ripple announced their decentralization strategy in May 2017 to make Ripple’s XRP Ledger (XRPL) more decentralized than Bitcoin’s. Noted at the time was the potential vulnerability of Bitcoin, 51% of which is controlled by just five mining pools at the time of writing — meaning that “the largest five pools working together could achieve a 51% attack.” Ripple released an update in October 2017, which stated:

“Ripple remains committed to decentralizing the XRP Ledger and divesting itself of operational control. This multi-phase approach does that, but is intentionally conservative and has been devised with a single goal in mind: to ensure the reliability and stability of the network during the transition period to a fully decentralized and distributed architecture.“

Since then, Ripple has reemphasized the decentralized nature of XRP, stating:

“The XRP Ledger is based on an inherently decentralized, democratic consensus mechanism — which no one party can control.“

Ripple Can’t Be Mined

Another criticism XRP has attracted is that it can’t be mined, as Bitcoin and many other cryptocurrencies can be. The advantage of having a mining-based cryptocurrency is that market conditions can partially help determine the amount of exertion expended in creating new blocks on the blockchain. 

This effort, in turn, can affect prices. If the price of a cryptocurrency is low, then less mining generally takes place, because it’s not cost-effective to do so (and vice versa for the opposite scenario). 

Although there are accusations that Ripple could have some malicious intent in holding these coins, the company has insisted they have justifiable reasons for doing so. They release a certain amount of coins monthly from their ledger escrows, up to a maximum of one billion.

In reality, though, significantly fewer coins are released, with the unused amount being rolled over to the next month’s allotment. This is done, Ripple maintains, so there isn’t a sudden upsurge in the supply of XRP, and the price doesn’t crash.

This assertion can be seen as a clear positive, since investors are less likely to see their positions liquidated due to sudden market moves.

The Bottom Line

If you’re prepared to play the long game and invest in Ripple XRP, it could well be a worthy investment. It’s also still a cheap asset, so it’s perfect for beginners who wish to start small. Ripple certainly looks like it might have a bright future.

Interestingly, David Schwartz, CTO of Ripple Labs, Inc., said at the 2019 Future of Fintech conference in New York that financial institutions are “extremely conservative” and “slow-moving.” This could go some way toward explaining that, while there has been much interest in XRP, actual adoption has been a slow process — and, as such, the price has stagnated for some time.

Of course, the outcome may ultimately rest on what transpires with Ripple's legal battles. Nevertheless, given XRP's unpredictable and surprising price history, XRP may very well be one digital asset worth adding to your investment portfolio.

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