As the two most valuable cryptocurrencies in the world, Bitcoin and Ethereum have received the most attention from the investment community. But there are also digital assets that don’t deserve attention, such as XRP (CRYPTO: XRP).
This innovative cryptocurrency has been performing well since its inception over a decade ago. However, it is now down 86% from its peak in January 2018. Should investors take advantage of the current situation and buy XRP for $100 now and hold it beyond 2024? It’s worth considering both the good and the bad before drawing any conclusions .
Challenge to financial services
According to online cryptocurrency tracker CoinGecko, there are approximately 15,000 types of cryptocurrencies in the world. I don’t think it’s a bold claim to say that most of them, probably almost all of them, are useless, fraudulent, and add no value to society. Over a long enough period of time, their market capitalization will approach zero.
This means that certain cryptocurrencies need to be used in the real world to have a better chance of long-term survival and success. This is where XRP has potential.
XRP is a cryptocurrency that facilitates cross-border money transfers. Someone could convert their local currency, say the US dollar, to XRP and then send it to someone in another country, who then converts it to their own currency. Since the cryptocurrency is built on blockchain technology, XRP transactions are extremely fast and cheap. That’s what makes it stand out.
The remittance market is huge, so there are also benefits. The Migration Data Portal estimates that global remittances reached $857 billion in 2023. This does not include the money that larger institutions such as businesses, banks, and governments move from country to country. That market will likely be worth trillions of dollars on an annual basis.
Even if XRP captures a small portion of this huge opportunity, it is not difficult to see that demand for the token could skyrocket. Prices may also increase accordingly.
Image source: Getty Images.
clear risk
While XRP may have serious potential, investors cannot ignore several important downside factors that could derail the bullish thesis. I think there are three clear risks today.
Regulatory issues remain a major concern. XRP is under scrutiny after the Securities and Exchange Commission (SEC) claimed that the initial token sale violated securities laws. A judge imposed a smaller-than-expected fine on Ripple, which operates XRP, at $125 million. However, the SEC was not satisfied with this ruling and recently filed a notice of appeal. This could be the start of a years-long legal battle, adding a lot of uncertainty.
story continues
There are also noteworthy competitive strengths. XRP is poised to upend important aspects of the financial services industry. The big banks aren’t going to sit idly by and let newcomers disrupt what is arguably their biggest source of revenue. It may take a lot of time and effort for XRP to scale up and gain trust and further adoption.
When it comes to virtual currencies, don’t forget about technical risks. Blockchain technology is still relatively new. There is still a lot to prove, especially when it comes to reliability and scalability. Network outages and hacks are not uncommon. This is a real threat that could undo everything XRP has achieved.
Investor’s perspective
At the end of the day, whether you need to spend $100 to buy XRP depends on your risk tolerance. If you are bullish on a token, it makes sense to buy a small position as part of a well-diversified portfolio.
I take a different position. I think there’s too much uncertainty for the next few years, so I’m happy to pass.
Don’t miss out on this potentially lucrative second chance
Have you ever felt like you missed out on buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our team of expert analysts will issue a “Double Down” stock recommendation on a company we think is about to crash. If you’re already worried that you’re missing out on an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves.
Amazon: If you invested $1,000 when it doubled in 2010, you’d get $21,285!*
Apple: If you invested $1,000 when it doubled in 2008, you’d get $44,456!*
Netflix: If you invested $1,000 when it doubled in 2004, you would have earned $411,959. *
We currently have “double down” alerts on three great companies, and we may not see an opportunity like this again anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor will return as of October 14, 2024
Neil Patel and his clients have no positions in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.
Should I buy XRP (Ripple) for $100 now and hold it beyond 2024? Originally published by The Motley Fool
