The Beginner’s Guide to Buying Ripple
While Ethereum and Bitcoin still enjoy most of the limelight, there are still other promising cryptocurrencies around.
One of the new decentralized cryptocurrency projects that have been making waves in the Crypto community is Ripple or XRP. Although Ripple’s price still lags far behind Bitcoin and Ethereum, it has nevertheless gained 3,800% in recent months, which brings it to the 4th spot on the list of more than 100 cryptocurrencies with regard to market capitalization. Perhaps what is even more important is the technology that Ripple provides aside from its currency. The protocol for the Ripple blockchain has gained recognition by more than 60 major financial institutions across the globe.
While with Bitcoin, anyone can keep, send, and receive bitcoins over a decentralized network, and from all over the world with low fees, Ripple’s aim is that anyone can do the same also with any other currency.
What is Ripple
To help you get started, it is useful to look at Ripple as being entirely different from Bitcoin. Ripple isn’t a consumer-facing product; rather it is back-end infrastructure. It is not a current; it’s an open-source, global exchange. Anyone can access Ripple, and everyone can equal rights to use it. Ripple, the company, doesn’t control the network, limit access, or collect fees.
Ripple is a distributed and real-time payment protocol for anything of value. It is a shared public database, with a distributed currency exchange that is built-in, and it operates as the first universal translator for money in the world. Ripple is currency agnostic, and it has a foreign exchange component that’s built straight into the protocol. Ripple acts as a pathfinding algorithm for finding the best route for a dollar to become a pound or for airline miles to become Bitcoin. It looks at all the orders in the global order book. Anyone can place a bid-ask on anything of value. Ripple’s protocol is designed to direct every transaction to the lowest price that’s available on the market.
Ripple vs Bitcoin
There are several similarities between Bitcoin and Ripple, in addition to some major differences.
Ripple and Bitcoin each use a different method for reaching network consensus. Ripple uses an iterative consensus process, and Bitcoin uses Proof-of-Work (mining). The result is that Ripple is quicker than Bitcoin, only taking a few seconds to finalize the transactions. Also, compared to Bitcoin, Ripple is more energy efficient.
Both Bitcoin and Ripple are both decentralized. Bitcoin is a decentralized digital currency and Ripple is a decentralized transaction network. Ripple also contains a digital currency known as ripples or XRP.
The Bitcoin network monitors and tracks the movement of Bitcoins, and the Ripple network can track all types of information. As a result, Ripple can track the account balances of any existing currency.
Bitcoin requires centralized exchanges, like Mt. Gox for example. The Ripple network acts a decentralized exchange. Therefore, if someone is looking to sell their XRP for USD, they can do so within the network, without needing a third party. This is helpful to Bitcoiners too: they can trade Bitcoin on the Ripple network without fear that an exchange will go down and disrupt the market.
How to Buy Ripple
Even though Ripple has a long way to go, considering its expansion pace, one should consider buying XRP. Ripple’s value is increasing considerably as more and more financial institutions are adopting it or they are in the process of utilizing it as a payments gateway for investments and transfers. Also, Ripple is making it to cryptocurrency fund portfolios, which will help to strengthen its position further.
One can buy or sell Ripple on most major cryptocurrency exchanges. Also, the digital currency can be purchased on cryptocurrency brokerage platforms or through a wallet provider or exchange. You can also buy Ripple as a Contract for Difference (CFD) from a regulated broker online. You can view our top recommendations on our list above.
Trading Ripple CFDs
When trading Ripple as CFDs, you don’t need to worry that your XRP will get stolen. CFDs are a derivative product. Any of the potential profits are based on the movement of the Ripple price. But, there is no actual XRP purchased.
For traders of all levels, Ripple trading can be highly profitable. Since the Cryptocurrency market is relatively new, highly fragmented and has huge spreads, the arbitrage and margin trading are widely available.
Ripple has become the leading competitor to Bitcoin. Now you can trade Ripple with some of the top online brokers.
When you buy Ripple online as a CFD with a regulated broker, you can buy or sell instantly, or you can trade long or short. This then gives you the additional advantages of being able to act on your analysis of the future of digital currency.
If you want to trade Ripple CFDs, you can take a look above at our top broker recommendations and read our reviews to get more in-depth information
How to Choose an Online Broker to Buy Ripple
Because there’s so much competition in the Ripple exchange market as well as having countless Brokers and Exchanges to choose from. It can be difficult to know which option will work best for you. Here are a few things to keep in mind before deciding on the right Broker for your Ripple trading:
Use a regulated Brokerage or Exchange. The regulatory body develops rules and services protect the integrity of the market, as well as traders, and investors. Due to possible safety concerns, you should exclusively open accounts with regulated brokers.
Cryptocurrency trading happens 24 hrs a day, so customer support should be available at all times. You’ll want to be able to speak with a live support person. The representative’s ability to answer your questions regarding spreads and leverage, as well as company details is very telling. The details of a good broker should be out in the open for everyone to see, either online or otherwise.
An ideal broker for Ripple trading should be able to offer clients multiple account options or provide an element of customizability. Look for a broker that offers competitive spreads and easy deposits/withdrawals.
If you want to buy Ripple it will, of course, cost money. However, unlike buying stocks or bonds, CFD brokers generally charge a percentage to buy Ripple. You may consider looking for a broker that charges a flat rate fee instead of the percentage model.
Because Ripple is traded in a market where people are both looking to buy or sell the digital currency, it’s crucial to consider the amount of liquidity that an exchange can have. Liquidity is the ability to sell without the price being significantly affected, causing the price to drop.
For more information on cryptocurrencies, please see our tutorial: The Basics of Cryptocurrency