XRP’s performance over the years
Recently, the Ripple price surged to an all-time high (ATH) of $3.39 per coin, sparking debates among investors. Some argue that the price has risen sufficiently above its long-term resistance, signaling that it might be a good time to buy in. Others believe waiting for a price dip to more favorable levels could yield better returns. However, the central question remains: is XRP worth buying at all, regardless of its past and current price trends? To answer this, we need to understand what XRP truly represents and its role in the broader financial ecosystem.
XRP is the native coin of the XRP Ledger (XRPL), a decentralized and open-source blockchain network launched in 2012 by Ripple Labs. The primary purpose of XRP is to facilitate cross-border payments, offering a faster and more cost-effective alternative to traditional financial systems. When transferring money between currencies that are not directly traded against each other, the process typically involves converting the first currency into USD and then converting the USD into the second currency. In these situations, XRP serves as a bridge currency, reducing both transaction time and costs.
One of XRP’s key features is its speed and affordability. As of February 2025, the average transaction fee on the XRP Ledger is less than a cent, typically ranging from 0.0025 to 0.0035 XRP per transaction. Transactions are completed in under four seconds, starkly contrasting to the several business days required for traditional wire transfers. This efficiency has made XRP particularly useful in underbanked regions, where it provides greater access to financial services and opportunities for individuals with limited banking options.
The XRPL operates on a unique consensus mechanism, the Unique Node List (UNL), managed by trusted validators selected by the XRP community. Each transaction is validated by at least 80% of node operators, ensuring a high level of security and reliability within the network. This decentralized approach contrasts with traditional financial systems, which are often criticized for their centralization and slow transaction speeds.
XRP vs. traditional payment systems
When it comes to competing with traditional payment networks, XRP faces stiff competition from industry giants like VISA and Mastercard.
VISA is the undisputed leader, capable of processing up to 24,000 transactions per second (TPS) under optimal conditions. Mastercard, while considerably smaller, still handles up to 5,000 TPS.
In comparison, the XRP Ledger can process around 1,500 TPS, a relatively modest number considering the total volume of global payment transactions. This difference in processing power raises questions about XRP’s potential as a global payment solution.
XRP as an investment asset
From an investment perspective, XRP presents a unique set of challenges. Its total supply is capped at 100 billion coins, with nearly half of this amount held in escrow by Ripple Labs. While the remaining XRP is available for free circulation, the significant concentration of coins in escrow raises concerns about potential price manipulation and the overall centralization of the asset. Despite XRP’s relatively high correlation of 0.8 with Bitcoin and 0.6 with Ether, it still operates in a highly volatile and speculative market.
XRP’s previous ATH was $3.30 in January 2018, and it took seven years for the price to surpass this peak by just nine cents. This slow rate of appreciation, combined with the continuous release of approximately one billion XRP coins into circulation each month, raises concerns about the asset’s inflation. While Ripple Labs’ regular coin releases are intended to counter inflation, they also create ongoing selling pressure, potentially suppressing any significant long-term price increases.
Despite these challenges, Ripple Labs is a well-established company with growth potential. However, XRP should not be viewed as a traditional wealth-preserving asset, particularly when compared to more established financial instruments or even other cryptocurrencies that offer greater decentralization.
Disclaimer: Cryptocurrencies are one of the riskiest investment assets. Always consult with your financial advisor before making any investment decisions.