Ripple’s XRP Hits New Highs, Shoring up Position as Second Biggest Cryptocurrency
Ripple’s remarkable rise has continued into 2018, with the XRP coin currently trading over $3.60 having posted another day of 30% growth. By market capitalisation it is now 40% larger than Ethereum, long the second biggest cryptocurrency after Bitcoin. At these prices co-founder Chris Larsen, who owns 17% of Ripple, is now one of the richest men in the world.
Positive Financial News
Ripple’s performance was sluggish for most of 2017 before exploding in December after news that South Korean and Japanese banks were trialling the Ripple blockchain as a potentially cheaper way of conducting international transfers. Combined with Ripple’s partnership with American Express, this interest from the financial mainstream convinced investors that XRP was worth looking at.
Since then prices have continued to go up as bullish sentiment combined with positive news stories and speculation. There has been the launch of an XRP-denominated hedge fund and persistent rumours that Coinbase will add XRP, opening it up to a much bigger market.
Not a Cryptocurrency?
Some argue that Ripple is not a cryptocurrency at all. XRP is neither mined, nor decentralised, which is why its founders are currently so wealthy. Instead the currency was created in total by the company itself. This discouraged many potential investors who feared that the value of XRP could crash if Ripple released more tokens into the market. Responding to these concerns Ripple agreed to put 55 billion into escrow, with only 1 billion tokens made available to the company each month.
However, as enthusiasm has grown, so has scepticism. Some in the cryptocurrency community believe that Ripple is overvalued and that its price is based on a fear of missing out rather than solid fundamentals. Media attention around Bitcoin has created a new type of crypto investor who, expecting Bitcoin-like price performance, will move to anything whose price is already rising. It remains to be seen whether Ripple can maintain its price into 2018.