The Ripple cryptocurrency is perhaps the most talk about crypto asset in the crypto market, with lots of drama surrounding the company. Yet, very few people know that the assets can be a good long term investment by staking to earn interest on ripple network.
Before investing in Ripple or any crypto assets, it’s crucial that you fully understand it. In this guide, you will find out the history and vital information of Ripple, how it’s staked, staking reward and what you need to know about Ripple investing.
What is Ripple?
Ripple is a peer to peer technology founded in 2012 by software engineers Chris Larsen and Jed McCaleb. Comparable to any other cryptocurrencies, Ripple runs on blockchain technology.
Note: Ripple is not an open-source technology like other cryptocurrencies, hence it’s not regarded as a true cryptocurrency. Ripple operate in a closed ecosystem, which makes it more efficient for its purpose.
The notion behind Ripple creation was not to create a cryptocurrency. While networks security and coins value are equally important to any cryptocurrency network such as ethereum, Cardano among others.
Ripple major focus is to strengthen Network Security. This is to achieve its goal – To serve as the modern ‘SWIFT’. Swift ( society for worldwide interbank financial telecommunications) is a network used to transfer funds by financial institutions such as banks etc.
In 2018, Ripple rose to fame by fitting into the third position in cryptocurrencies market capitalization ranking
Special features of Ripple.
Ripple has a few unique features that set it apart from other cryptocurrencies. First, Ripple runs a consensual protocol, unlike most cryptocurrencies that concentrate mainly on proof of stake or proof of work.
This protocol validates transactions through the help of servers owned by banks. To ensure the Ripple Network is completely secured from strange behaviour, it introduced a closed network, whereby no external body contributes to the security of the network.
This prevents the 51% hypothetical attack of proof of work- a situation where more than 50 per cent of miners alter transaction history and carry out illicit activity.
In addition, the Ripple consensus mechanism is preferred to prove of stake in regards to a crisis in which stakers decide to remove their funds and freeze the network if they wanted to.
The other feature that set Ripple apart from other cryptocurrencies is that it’s faster and inexpensive compare to its counterparts ‘Swift.
Ripple CEO’ CTO Stefan Thomas says it’s 3 seconds quicker per single transaction than all other crypto assets.
For financial institutions to dumb their long term partner ‘ SWIFT,’ there will be a need for something quicker and cost less. This is the explanation why 99.9% of banks want Ripple to be a success.
With the adoption of Swift in 1977, swift operates by locking up over 10 trillion dollars for global payment from one geographical area to others.
For instance, if you want to transfer money to a friend of yours in another country that uses a different currency, your friends will get paid by he/she operates from the money being locked up.
So each bank must lock up a certain amount of money for funds transfer purposes only.
This is highly costly since a large amount of money. can be used for infrastructure development, instead of being idle.
With Ripple, the XRP token serves as a bridge between two different currencies, this removes the option to lock up huge funds.
Banks will only have to keep their traditional currency and open an account with XRP which saves money, time and ensure payment with real value transfer.
Staking to earn interest on ripple network
Ripple blockchain operates centralized staking, in another word, Lending. In centralised staking, you give out your assets to a Lending services provider for some time, in return, you earn interest.
This is a major technique to earn interest in Ripple. Lending ‘xrp’ to loan pool can be done either on an exchange, mobile wallets and the Defi platform.
Stakers earn about 4 – 10 per cent yearly interest.
Note: Ripple is not governed by the proof-of-stake consensus mechanism compared to Cardano, Algorand etc. It can not permit decentralize staking.
Total supply of Ripple
When Ripple was initially created, it was announced that there will be a maximum supply of 100 billion tokens.
They gave details on how it will be distributed. 80 billion tokens will be awarded to XRP and the other 20 billion will be shared among the team of developers.
Note: To improve XRP value, a fraction of XRP is razed per transaction. This lessened the amount of XRP present in the network with time.
How to stake and earn interest on Ripple.
staking to earn interest on ripple can be done on any Exchange site that currently trades it. Some of the popular picks include Binance and Kraken.
Staking to earn interest on Ripple can also be done on Lending platforms such as Youholder, Nuo Network etc.
Alternatively, you can opt-in for a mobile wallet by staking to earn interest on ripple massive gains. Nexo wallets offer this program.
Note: Relatively to other cryptocurrencies, Ripple annual per yield percentage changes frequently. You will need to visit various platforms to check the APY % they offer.
How is XRP performing in the crypto market so far?
Xrp has a momentous price record. Back in 2018, it reaches an all-time high price, slightly above $3. At the time of writing, 1xrp is traded at 1 dollar.
XRP is a prominent asset in the crypto market boasting a tremendous market capitalisation of about 50 billion dollars. Xrp is currently ranked at position #6 in the crypto market according to coinmarketcap.com
Notable Happening.
Dec 22, 2020, The security and exchange commission announced that it has filed legal action against Ripple company and two of its officials for conducting a $1.3 billion unregistered, ongoing digital assets offering.
Based on SEC complaint, Ripple founder and CEO raised funds to finance the company business which was gotten through the sale of Xrp tokens in unregistered security offering to investors globally back in 2013.
The gist of the SEC complaint is that XRP is not an asset but security, thus governed by strict security law.
We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”
“The registration requirements are designed to ensure that potential investors – including, importantly, retail investors – receive important information about an issuer’s business operations and financial condition,” said Marc P. Berger, Deputy Director of the SEC’s Enforcement Division.
However, Ripple responded to the SEC law case claiming that Xrp is a cryptocurrency and therefore should not be included in the SEC jurisdiction.
At the time of writing, the case hearing is still ongoing. But there seems to be a high chance of Ripple winning the case.
The future of XRP
While the outcome of the Ripple lawsuit is uncertain, its future strongly depends on it.
Most investors believe that the lawsuit move could define the future of Etherum, cryptocurrency and blockchain in general, therefore it’s a threat to the cryptocurrency community.
A win on the Ripple company side will see it grow speedily in the crypto market with various financial institutions adopting it.
