If you don’t feel complete or fulfilled with your investment plan, perhaps you need Ripple (XRP) to juice your portfolio. This article resonates with your concerns by exploring Ripple’s downsides and whether it’s a good idea to invest in it. You’ve probably heard of the company’s dispute with the SEC and is still in the woods. While the situation is looking good for Ripple, it still stands a chance of losing. The lawsuit scandal is just the tip of the iceberg.
Of course, several advantages like affordability, the ability to buy xrp using paypal, massive influence from partnerships and investors, etc., are worth mentioning.
Before delving into the depths of it, understand where you’re dipping your hands before investing massively in Ripple (XRP). Putting in a lot of cash without much background information places you at risk of losing significantly. One thing is a fact:
Ripple is not Cryptocurrency.
Ripple isn’t the same as cryptos like Bitcoin, Ethereum, Dogecoin, or Bitcoin Cash. It is mainly a digital payment protocol that streamlines local and cross-border payments worldwide. While the broad exposure creates many opportunities to solve bank transaction problems, you have to look out for mishaps to tread carefully. Here are a few disadvantages of Ripple (XRP) and the risks of its existence:
Ripple’s Developers will Not Create More XRP
Ripple already pre-mined all its XRP and has reserved some of it, if not in circulation yet. Cryptos like Ethereum are limitless, but as production decreases, prices will
surge to mean more profits for investors.
A High Likelihood of Overinflation
Ripple Lab owns a more significant percentage of XRP, with the Chairman, Chris Larsen, possessing almost a third. The network’s CEO, Brad Garlinghouse, also holds a reasonable amount, not forgetting Ripple’s executive board members. All these hands combined, one would say Ripple has concentrated a lot of its XRP on a central area, thus risking a chance of overinflation.
Ripple owns a massive share of XRP
Ripple Chairman Chris Larsen owns around a third of all XRP, making him and the other executive billionaires. Ripple CEO Brad Garlinghouse also holds a significant amount, as do other senior board members. With so much XRP concentrated in just a few hands, there’s a chance the price may be overinflated.
XRP will not be pre-mined again should it end in circulation has caused the above behaviour of allocating altcoins. The developers own substantial amounts because of the primary concern that there’ll be no more coins in the market years down the line.
Lack of Decentralization
As XRP is not labelled a cryptocurrency, one might argue that it is not subject to economic autonomy and decentralized principles. It was specially built to address problems within banking systems around the globe. As such, it may not suit your needs if you seek a crypto solution that revolutionizes how to store value or exchange digital assets better.
Stiff Competitive Market
SWIFT is Ripple’s biggest threat in the banking network. It is currently the most prominent worldwide payment system and a top choice of more than 10,000 financial organizations. Ripple will have to gather more influence by proving the effectiveness of its digital protocols to provide better, safer, and quicker transactional solutions.