Ripple’s XRP cryptocurrency is making some big waves.
Ripple’s XRP, which was created for banks and global money transfers, has skyrocketed in value this week.
On Monday, it had a market cap of just over $9 billion. By Wednesday, that market cap had more than doubled to $18.1 billion. Thursday, it had jumped to $23.63 billion, making it the fourth largest cryptocurrency globally.
With bitcoin sitting at just over $17,000, prices for an individual Ripple XRP are considerably more affordable, making it more attractive to cryptocurrency speculators. XRP rose to $0.45 yesterday, and extended gains to $0.65 today according to coindesk.
While this week’s surge has pushed Litecoin down to the fifth most valuable cryptocurrency below Ripple, Ripple is still far below bitcoin and ethereum.
What is Ripple?
Ripple was released in 2012, but it’s actually older than bitcoin. The original version was created in 2004, according to Bitcoin Magazine, but it never really went anywhere until a new management team was put in place.
Ripple’s XRP allows users to send, receive, and hold any currency in a decentralized way via the Ripple network, and is believed to be more secure than other cryptocurrencies, including bitcoin.
The goal of the Ripple system is to enable people to break free of the “walled gardens” of financial networks, i.e. credit cards, banks, and other institutions that restrict access with fees, charges for currency exchanges, and processing delays.
“Payment systems today are where email was in the early ‘80s. Every provider built their own system for their customers and if people used different systems, they couldn’t easily interact with each other. Ripple is designed to connect different payment systems together,” said Ripple’s chief cryptographer, David Schwartz.
The real appeal, however, of Ripple’s XRP for banks is its liquidity.
“The liquidity needs of banks today is managed with literally ten trillion of float that sits in these nostro and vostro accounts. We believe very strongly this is an inefficient model. You can use digital assets to fund liquidty, and Ripple is uniquely positioned to capitalize on that. Bitcoin takes four hours to settle a transaction. XRP takes 3.6 seconds,” Ripple CEO Brad Garlinghouse said to Fortune in October.
Why is Ripple surging?
Ripple’s XRP token has gone on a tear seemingly due to increased demand for alternative cryptocurrencies as bitcoin has surged in value.
However, Ripple has also had some very positive developments. Ripple has so far licensed its blockchain technology to over 100 banks—including American Express,—and it was announced earlier this week that banks in Japan and South Korea are set to test cross-border payments using Ripple-based systems.
Year-to-date, Ripple’s XRP has seen its value rise more than 7,000% and its market cap increase by more than 8,000%.