-
Key Points
Even after a recent pullback, XRP is up 397% over the last year. Much of that growth is due to the crypto-friendly political climate and the winding down of a lawsuit between the SEC and Ripple, the company that issues XRP.
XRP has been one of many cryptocurrencies to explode in value over the years. Doing that again will be challenging, but there's a path for XRP to deliver tenfold returns.
Cutting into SWIFT's market could unlock substantial growth for XRP
Ripple provides payment solutions for financial companies, focusing on cross-border payments. Ripple's blockchain-based network moves money instantly while reducing fees. It also offers an on-demand liquidity (ODL) feature, which is where XRP comes into play. Instead of needing pre-funded accounts with foreign currencies, banks can instantly send payments abroad using XRP as a bridge currency.
SWIFT is the current default option for international money transfers, but it's not fast or cheap. Transfers can take several days and cost as much as $50. Ripple CEO Brad Garlinghouse believes XRP could capture 14% of SWIFT's global payments volume (about $150 trillion) within five years, equating to $21 trillion per year. If Ripple can establish itself as a major payments platform, it will likely lead to much more usage of XRP from financial institutions in need of instant liquidity in foreign currencies.
10x returns are challenging, but not impossible
XRP's market cap is currently about $170 billion. If it increases tenfold, it would be worth $1.7 trillion. Bitcoin is the only cryptocurrency that has reached that value, so it's no small feat.
Because of its role in cross-border payments, XRP is a compelling cryptocurrency investment. While it's doubtful it delivers tenfold returns over the next decade, simply because of how much growth would be required, it remains a quality cryptocurrency to consider for a portfolio.
Should you buy stock in XRP right now?
Before you buy stock in XRP, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now, and XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of the recommendation, you’d have $649,657! Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of the recommendation, you’d have $1,090,993!
Stock Advisor’s total average return is 1,057% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
This article has been published in fool.com via Yahoo News.
