First it was bitcoin, then ethereum, litecoin, and other digital currencies became the center of attention. Now, it's apparently time for ripple to enjoy the spotlight. The once-obscure cryptocurrency has catapulted itself into the No. 1 spot on the list of largest digital currencies by market cap, surpassing bitcoin cash, ethereum, and a host of other competitors.
Ethereum is currently hovering at a market cap of just above $120 billion, making it larger than any other digital currency except bitcoin. All of this has happened as a result of massive upswings in the price of XRP, ripple's token, which is trading above $3 as of this writing. Why the sudden price gains for ripple? And what will happen to this newly-popular digital currency in the future?
Price Spikes In December
At the beginning of December 2017, ripple was trading for just $0.25 per token. That might sound puny, but it was still a major markup over its price at the beginning of the year. In early January 2017, XRP was trading at $0.006 per token.
From that time until exactly one year later, in early January of 2018, the price of XRP jumped by more than 30,000% – much of that taking place in the final weeks of 2017.
Why the sudden interest in ripple? The currency has been around for years, having launched in 2012, and it even made headlines earlier in 2017 for some of its underlying mechanisms, which banks around the world seemed to take an interest in.
Massive Potential in the Financial World
One potential reason why ripple suddenly took off is its underlying potential to transform the banking world. (See also: What Is the Biggest Security Threat to Ripple Cryptocurrency?)
When the digital currency was launched several years ago, it was designed in part to help facilitate global financial transactions. According to CNN, ripple "differentiates itself from other digital currency platforms by its connections to legitimate banks."
While most digital currencies aim to be completely removed from the traditional finance world, ripple has aimed to take the power of blockchain technology to help enhance that world. Since its launch, major banks like UBS, Bank of America, and Santander have all expressed interest in the ripple platform.
Another reason why ripple is distinct from many of its competitors has to do with the control of the tokens themselves. Unlike most digital currencies, ripple isn't mined by users. Rather, it is generated by Ripple, the company that created and distributes the token.
Ripple created 100 billion XRP tokens initially, with 38 billion of them in circulation at this time. Ripple management has the ability to control the overall saturation of the market with tokens. Along with this, some leaders at Ripple the company have reportedly become super-rich in the span of just weeks, thanks to their large stakes in XRP tokens. (See more: Ripple Execs Are Now Billionaires Thanks to XRP's Success.)
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Site Edit or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Site Edit makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrency.