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"Is XRP a Millionaire Maker?"
Key Points
XRP, the native cryptocurrency of the XRP Ledger, has made many millionaires since its public debut in 2013. Initially trading at $0.006 per token, it now trades at about $3. A $2,500 investment back then would be worth $1.25 million today.
But could XRP turn a fresh $2,500 investment into $1 million again during the next decade? Let's review its past performance and future catalysts to find out.
Why did XRP's price soar?
The founders of Ripple Labs, a fintech company offering blockchain-based money transfers as a cheaper and faster alternative to traditional SWIFT transfers, created XRP in 2012. Ripple used XRP as a bridge currency to accelerate cross-border transfers for its customers. This approach aims to reduce foreign exchange and bank fees by converting currencies to XRP instead of another fiat currency.
Unlike Bitcoin, XRP can't be mined. Ripple's founders pre-mined the entire supply of 100 billion tokens, allocating 80 billion to the company and 20 billion to themselves. This capital-raising strategy led to a lawsuit from the Securities and Exchange Commission (SEC) in 2020, claiming that Ripple was selling unlicensed securities, causing XRP to be delisted from top cryptocurrency exchanges and losing major customers.
The lawsuit depressed XRP's price until 2024, when it concluded with a lighter-than-expected fine for Ripple. A U.S. court ruled that XRP wasn't an unlicensed security when sold to retail investors. Major exchanges relisted XRP, several firms submitted applications for XRP exchange-traded funds (ETFs), and Ripple even applied for its own U.S. banking license. These catalysts caused XRP's price to skyrocket more than 500% during the past 12 months.
But can XRP generate more millionaire-making gains?
XRP's future looks brighter, but several challenges could impede its potential for millionaire-making gains. First, its value is tied to being a bridge currency for cross-border transactions. The rise of stablecoins like Tether, which are pegged to the U.S. dollar, could undermine this strategy as they may be better suited for cross-border transfers due to their stability.
Second, XRP doesn't natively support smart contracts, unlike Ethereum and other blockchains. Although it offers lightweight "hooks" for simpler programs, it is considering sidechains that support Ethereum-based smart contracts, but these plans are not expected to come to fruition soon.
Lastly, the Federal Reserve hasn't cut benchmark rates this year. Elevated interest rates could drive investors away from cryptocurrencies and create macroeconomic headwinds for Ripple's customers, which rely on cross-border money transfers.
Currently, XRP has a market cap of $180 billion. For it to turn a $2,500 investment into $1 million in the next 10 years, its price would need to surge 39,900% to $1,600, increasing its market cap to more than $70 trillion. In comparison, gold's market value is $23.1 trillion, Bitcoin is valued at $2.3 trillion, and Ethereum is worth $461 billion.
It is unlikely that XRP will surpass these top assets to become the world's most valuable cryptocurrency. While it might stabilize and grow in the next decade, especially if ETFs are approved and its developer ecosystem expands, investors shouldn't expect it to deliver millionaire-making gains.
This article has been published in fool.com via Yahoo News.
Is XRP a Millionaire Maker?
This little cryptocurrency is overcoming its biggest challenges.
finance.yahoo.com
