If you invest in cryptos you are most likely know this “revolutionary payment processor cryptocurrency” or “crypto coin of the banks” that is XRP, released by Ripple Labs. And while Internet rumors and general online opinion might be good, this is very bad investment. Here’s why I advise against buying XRP.

5. Despite Internet rumors, no big company has adopted XRP as a payment processor



Underlying tech is irrelevant when it comes to cryptos. Most people gamble on cryptocurrencies, tempted by potential returns and not by final product, because in case of XRP there is none. Ripple was founded in 2012 and since 5 years they haven’t attracted a single bank that fully adopted their “payment processing” for settlements, except experimental trials.

Despite Internet claims XRP isn’t used by “Microsoft”, “Citibank” or even “VISA”. Banks have no incentive to adopt this ”scalable digital asset”, “open-source technology” which is provided by “dedicated team of world-class engineers”. This company likes to use a lot of trendy buzzwords, that’s for sure – but can’t find any major customer on their product.

4. There is no place for “cheap payment processor” on the financial market

According to Moore’s Law CPU processing power is growing exponentially, and chip performance is doubling every 18 months, so clearing payments isn’t big problem for financial institution and will be only cheaper and faster in the future. This means there is no place for “cheap payment processor” in a market and the main proof is that Ripple haven’t convinced any bank to fully use their “revolutionary solution” beyond trials yet and will even have less chance in next years.

On a central place on the Ripple.com main page you will find a picture that supposedly depicts Ripple benefits (below). Let’s take a look at how much crap Ripple contained in a single graph:

Perfect visualization of payment infrastructure problems – suitable for ca. 1986 I think! Source: Ripple.com



SLOW: Supposedly, payments now take 3-5 days to settle. Really? PayPal and Credit Card payments are resolved in a fraction of second and when you are buying from online store you can download your digital products instantly or get physical product delivered next day. There are now hundreds of other similar regional payment systems like Chinese Alipay, Russian Yandex Money or Polish PayU that allows instant transfers. Hell, I get wire transfer payments from Hongkong – delivered in 4 hours, which this is the slowest payment method available! So if you claim that payments take 3-5 days, that’s simply a bullshit.

UNRELIABLE: “High failure rates” – Have you ever had a “bank failure” that you had to explain in bank and you didn’t get your payment? Clearing systems have so sophisticated error and verification systems that there is almost no possibility of faulty transfer, unless an error has been made by user – like sending money to wrong account number or fast payment address.

UNACCEPTABLE: “People demand a seamless and elegant experience”. What does it even mean? Who are these “people”? What is this “elegant experience”? Why payments are now “unacceptable”? And more importantly, why do you allow marketing intern Stacy to write such meaningless ad slogans? Payments are now as simple as possible and have never been easier to do. Solutions like PayPal OneTouch or Amazon 1-Click Ordering makes it a 5-seconds process and even if you have wire transfer to do, you can log into your bank account system and do it in less than a minute. Is this “unacceptable” to anyone?

EXPENSIVE: They didn’t even provide a source, just “World Trade Organization” and “Federal Reserve”, so you can doubt this $1,6 trillion figure as well. Costs are important element of bank payment clearings for banks – but constant growth of processing power and cheaper bandwidth makes it less of a problem with each passing year. If Ripple couldn’t find a single client for their payments processing in last 5 years, good luck finding one in the future.

3. There is big lawsuit pending against Ripple

Ripple has just been sued by R3 Holdco LLC over options contract. This former Ripple partner claims, that the company unilaterally terminated their contract (by e-mail, which is very unprofessional) and now wants up to $1 bln from Ripple. Such big amount of money might prompt Ripple to release even more XRP to markets, further diluting its price. And they can dump all they want want.

2. Ripple Labs can release any amounts of XRP to markets, because it’s centralized currency

According to https://ripple.com/xrp-portal:

“…we will engage in distribution strategies that we expect will result in a stable and strengthening XRP exchange rate against other currencies.” “…we expect our company to hold approximately 50 billion XRP by the end of 2021. This schedule is indicative and discretionary.”

Which exactly means, that they can dump any amount they want and are announcing additional “50 billion XRP in a few years”, with “discretionary manner” (read: however we want, because we own it). If you believe in decentralized cryptocurrencies and that’s your reason for investing in this coin, well, you’re in wrong place because XRP is worse than fiat in this regard, as unlike Bitcoin, Ripple holds total power over supply and can inflate market with their virtual coins as they see fit. Central banks have at least strict rules regarding money printing.

XRP is corporate cryptocurrency – but you shouldn’t call it crypto then, but maybe “corporate fiat”.

1. XRP capitalization is falling rapidly

So how big is XRP virtual coin in terms of market cap? Comparing to NASDAQ stocks, entire capitalization (worth of “coins” in USD) is less than 1% Apple or 2% Exxon Mobil capitalization. On top of that, XRP capitalization fell more than 50% since May 2017, which means that buyers faith in this online coin is dropping rapidly. It’s tiny, because no one cares and institutional investors aren’t interested in buying it.

XRP coin capitalization fell from 15,2 bln to 7 bln in just 4 months (coinmarketcap.com)

And for Ripple’s sake let’s not even talk about the price. In just last 4 months XRP price fell by more than 30% and there doesn’t seem to be end of this – unless Ripple manipulates market by releasing more coins.

And if you look at the technicals for daily charts, its carnage: almost all indicators suggests selling. You can tell just from technical price analyisis that it’s an asset highly unsuitable for buying and holding and its outlook look bleak.

But where can I sell it?

There are several exchanges that allows you to sell cryptocurrencies. My top pick is eToro that allows you to put unleveraged shorts on crypto CFDs, with many cryptos available for selling. eToro is simple to use and provides web-based user interface with demo account, so I highly recommend it especially to beginners. You can also copy my trades directly through copy-trading feature. Banking on greed is easy!

Disclaimer: Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.