Ripple Recap: Ripple vs. Other Cryptos and Its Financial Outlook

On January 31, 2018, or the day of my presentation on Ripple in #IS6621, Ripple (XRP)’s price was at $1.16. During my presentation, I gave an overview of how Ripple functions, its pros and cons, and its role as a bridge between cryptocurrency and financial institutions. I also remember indirectly touting ripple as one of the best cryptocurrencies with heavier emphasis on pros than cons. Well, I might have to take my sales pitch back, because it went all the way down to mere 60 cents within a week (a 50% drop!). Although it did recover by today, betting on ripple solely based on its efficiency and speed in completing transactions may not be a good idea due to lots of regulations and uncertainty in adopting ripple as an integrated tool for global payments.

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Ripple’s price chart from Jan 29, 2018 to Feb 4, 2018

Earlier this morning, I received everyone’s feedback on my presentation (which I very much appreciate; thank you very much!!) and noticed that many of you wanted to hear more about comparing Ripple to other more well-known cryptocurrencies like Bitcoin. And I also saw many comments that making the presentation easier to understand for “beginners” in cryptocurrency-related topics would have improved the overall experience for the class, which I wholeheartedly agree (and I myself am a beginner as well indeed). There was a lot more I wanted to discuss beyond the time constraint, but that’s why blog post is here for us!

Initially, I planned on discussing the financial overlook of Ripple for most of the Ripple blog post, but I will include a short version of it with a brief summary of the presentation and comparison between bitcoin and Ripple (please feel free to leave comments if you have any further questions! I will do my best to answer them).


Let’s get it

Just to recap:

Ripple is a special type of cryptocurrency that connects banks/payment providers with an emphasis on speed, liquidity and low transaction costs. Ripple can mean 3 different things:

1. The Ripple network: An open source payment system like Bitcoin’s blockchain that can be used to transfer both fiat currencies and cryptocurrencies like Bitcoin.

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2. Ripple (XRP): A type of cryptocurrency that trades on the market under the symbol XRP and is designed specially for financial institutions and payment companies.


3. Ripple: The name of a company that has created and enabled a global network of banks to use the Ripple software to revolutionize global payment system.

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Essentially, it has its own gateways that enable payment providers in its network to transfer both fiat currency (USD, GBP, etc.) and cryptocurrency (bitcoin, ethereum, etc.) at a much faster speed and lower cost than the traditional payment transfer system. The Ripple network also serves as a currency exchange between all currency types, and its liquidity is guaranteed by XRP (the coin itself) that is specifically built for providing source liquidity to banks/payment servicing firms. This is the reason why XRP’s intraday price jumps 20%+ when a well-known financial institution mentions about the possibility of joining the Ripple network for its payment service. The more financial institutions join the network and acknowledge Ripple’s usefulness, the more usage XRP has as a liquidity provider in an integrated financial network.

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Adoption of Ripple in the cross-border payment system

Now, some of its strengths & weaknesses (I plan on focusing more on the weakness side as I couldn’t cover them in detail during the presentation):


  1. Speed: Transactions in XRP can be settled in four seconds, faster than any major cryptocurrency right now.
  2. Scalability: Ripple can handle more than 1,500 transactions/second, significantly more than other cryptocurrencies can.
  3. Cost efficiency: Ripple’s network significantly lowers payment processing fee, which is the major source of cost for global payments.
  4. Stability: Ripple’s strong connection with financial institutions signal a relatively safer investment that offers long-term protection to many investors.


Simplified chart from Ripple’s resources



Too many Ripple coins out there…

  1. Lack of scarcity: XRP lacks the scarcity appeal of Bitcoin and other limited cryptocurrencies because there are 100 billion XRP total, with a circulating supply of about 38.7 billion. Yes, that is a lot, but depending on how one sees the number “100 billion” big or small in light of financial institutions acceptance of ripple in the future, his/her demand for Ripple may differ a lot. There is also a concern among current Ripple investors that Ripple (the company) is promoting the blockchain technology to banks without adopting XRP into the transaction. This makes the value of XRP not that desirable compared to other coins that are scarce.
  2. Centralization: Unlike bitcoin, Ripple cannot be “mined” or created by its user base. Ripple (the company) has full control over XRP – all 100 billion of them. However, to ease this concern for many investors, Ripple (the company) released a decentralized strategy of storing 55 billion XRP tokens in escrow. This escrow account allows Ripple (the company) to sell at most a billion/month for its R&D and funding for additional projects, which is not a ridiculous amount that would disrupt the entire XRP price (and the CEO of Ripple is very active in communicating Ripple’s next steps, so the investors will have a full expectation of what will come ahead).

Although I dove a bit further into Ripple’s weaknesses, the rest should have been a quick recap of what I covered during my presentation. Ripple’s weaknesses really depend on one’s perception of Ripple’s centralization and fixed quantity, and it can be both good and bad depending on his/her viewpoint about the outlook of Ripple in the future. If one believes more control given to banks and Ripple (the company) would ensure stability, and 100 billion tokens are not that many with hopes of more banks adopting Ripple, these weaknesses can serve as strengths for Ripple. However, for those who don’t agree with the previous sentence may argue the opposite in light of its investment opportunities.

Regarding the discussion between Ripple vs. Bitcoin, although the list is not spelled out in a crystal-clear format, many of their differences have already been laid out in Ripple’s pros and cons section. Ripple far exceeds other cryptocurrencies with speed in transactions, scalability in enabling numerous transactions per second, and cost efficiency. However, it cannot be “mined” (i.e. created) with a fixed quantity, and is centralized unlike the rest of cryptocurrencies that are decentralized. Now, let’s dig a bit deeper:


From left: Ripple, Ethereum, and Bitcoin

  1. Misconception of Ripple vs. Bitcoin: Ripple is NOT a competition to Bitcoin. In fact, Ripple complements the usage of Bitcoin. The two currencies’ positioning differs, where Ripple is used to provide liquidity for any type of currency (both fiat and crypto) including Bitcoin in the Ripple network. It is easy to confuse each type of cryptocurrency as a competition to one another, but the reality is that Ripple is a complementary unit for Bitcoin in its core usage. Ripple’s competitors include R3 and SWIFT who focus on improving the global payment transfer system.
  2. Decentralization vs. Centralization: As mentioned earlier, Ripple is the only cryptocurrency that is centralized due to the impossibility of mining the tokens. This also ensures that there is no technical difficulties for Ripple in terms of mining the currency (for other coins, this can be an issue). Cryptos like Bitcoin or Ethereum are completely decentralized, meaning that millions of global miners who mine these tokens have full control over their coins, and no particular entity has a real control over the network. Many crypto investors favor this decentralized aspect of Bitcoin as they do not enjoy having strict regulations or restrictions that hinder their free flow/creation. On the other hand, Ripple (both the network and XRP) is handled entirely by financial institutions and Ripple themselves. This enables a more stable control for the currency. Just a quick note, as of the end of 2017, coin supply limit for Bitcoin was 21 million, whereas the circulating supply for Ripple was 39 billion. Quite a difference.
  3. Media: As we know, Bitcoin was the first cryptocurrency that received the “media hype” among all the cryptocurrencies. After talking to a trading analyst who currently works in the commodities sector (fun fact: cryptocurrency is treated as a commodity, not FX at banks), the role that media played on Bitcoin was one of the biggest reasons behind its boom. If you analyze carefully, Ripple provides far more efficient transaction than any other cryptocurrencies. Ripple just recently started to receive attention from the media. Scarcity matters as well, but there is no clear reason behind the “correct” price as there is no benchmark to compare it against.


Out of the things I wrote about Ripple vs. Bitcoin, the 3 most noteworthy things to take away are the following: Ripple’s efficiency in transaction in comparison to Bitcoin, its abundance in quantity, and the demystification of Ripple as Bitcoin’s competitor. Lastly, I have some key information about Ripple’s financial overview for your benefit:

  • $41.2B market cap as of February 11, 2018 with a circulating supply about 38.7B
  • From late September 2017 to early January 2018, XRP saw an absurd 1,300 percent increase in value, then it dropped most of the gains within a month.
  • Per coin value is incredibly cheap (about 25 cents by the beginning of December, and went up to about $3.23, then now is $1.09 as of February 11, 2018. In fact, it began at a value less than a cent when it first started ($0.005 per coin until mid 2017). The graph below should help illustrate this.
  • Ripple’s regulatory environment change constantly; this may alter the value of ripple drastically, especially when Korea is responsible for about 44% of the Q4 2017 volume of ripple (recently, there have been numerous discussions about strengthening regulatory scheme for cryptocurrencies in South Korea, which caused significant drop in many cryptos).

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Ripple’s Financial performance in the past year


More active version 

Based on the research I’ve found, the media started to notice Ripple less than a year ago (mid-2017) when its value rose above a cent, and its hype has peaked in the past few months until the recent drop this past month. Despite the sudden drop this past month, one must realize that Ripple’s value increased from less than a cent to above a dollar within a year (about 20000% increase). Regardless of the past fluctuations, Ripple’s success depends on the number of financial institutions on the Ripple network (has been growing steadily over the past year), the number of Ripple product users, and adoption of XRP in those transactions. The more banks adopt Ripple, the wider usage XRP has for their transactions, eventually increasing people’s demand for XRP. This information will be the key metric that provides a future outlook for Ripple and signals whether one should invest or divest from Ripple. In addition to Ripple’s future opportunities, one must have a full faith in the Ripple developer team and their activities in meeting their quarterly goals to invest in this extremely volatile asset.

Now that you have all this info, would you invest or not invest in Ripple?


Me before seeing the recent price drop


What every ripple (long position) investor hopes


Me right now

Thank you for reading :)


Jo Oh the Bro / Jobabes121



  1. Great followup to a solid presentation!

    1. Jobabes121 · ·

      Thank you, Professor!

  2. Tully Horne · ·

    I laughed at those GIFs at the end because that is exactly what I was feeling after you asked the question of whether to invest or not. To be honest, I would like to know more about the crypto market as a whole before I invest in Ripple or any crypto. But, thanks to you, I would say I know the most about Ripple! What I am most interested in hearing is Professor Kane’s take on the crypto market, specifically Bitcoin. It seems that cryptocurrencies are here to stay and can have a profound impact on the financial markets, but I am curious to see what separates those who sink versus those who stay afloat. I think the biggest impact on them is the regulatory environment, which you mentioned.

    1. Jobabes121 · ·

      Thanks for reading, and yes I do agree with the regulatory environment playing the biggest role for their future financial performance. I am looking forward to our in-class discussion on crypto as well!

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