Blockchain Investor Analysis

Ripple logo

Ripple

XRP
Current Price $0.20 (+0.3%)
Ripple's XRP is a digital currency that plays a role in Ripple's payments network that is primarily targeted at banks and other financial institutions.

Our Rating:

Market

Problem that it solves

Ripple has, through efficient and streamlined efforts, identified the problem they wish to solve within the banking industry. Ripple wants to eliminate the time it can take banks to transfer funds to each other or overseas.

Customers

Ripple wants to attract major banks and financial institutions as its primary target market. Its customer base is well-defined and the general community understands Ripple's mission to be the sole provider of payment processes to these banks.

Value creation

The value of adopting Ripple's various protocols is difficult to determine. Their website mentions 'cutting costs' plenty of times, so it's safe to assume that their primary goal is to reduce transaction costs and remove any time or security related obstacles as well.

Market structure

Thousands of companies are eager for innovation in cross-border payments. Business has become increasingly international, and firms need new ways to send money fast.

Market size

Although they have yet to acquire a sliver of the total addressable market, Ripple still wants to engage with one of the largest target markets: the banks.

Regulatory risks

Ripple wants to change the ways in which financial institutions send each other money, but with that comes the eyes and ears of the SEC. Approving software to handle money in the financial sector will often take months if not years. Moreover, Ripple is facing a lawsuit that claims XRP is a security.

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Competitive Advantage

Technology/blockchain platform

Ripple has developed novel payments technology based on the blockchain that enables high-speed, low-cost payments. The company was one of the first blockchain companies and its digital currency has stood the test of time.

Lead time advantage

The Ripple team has chipped away at the global financial system for years and has yet to make any significant progress. Their partners would often test run certain solutions only after Ripple paid them to do so. Most of the experiments have either ended or failed to make any real progress.

Contacts and networks

Ripple already has dozens banks and financial institutions that use its technology. Its ability to each more key customers is undisputed.

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Management Team

Entrepreneurial Team

The top Ripple executives have received much criticism over the years due to their own version of 'hodling'. The Ripple Foundation holds half of all XRP in existence, acting as the central bank of its own currency. Despite the backlash, the Ripple team has done well to develop Ripple's brand and maintain a solid foothold atop the digital asset pyramid.

Industry/technical experience

The Ripple foundation and XRP token have been a mainstay in the industry for quite some time. The executive team leading the charge undoubtedly has over 10,000 hours in this space, but many have criticized Ripple's approach to solving problems as being too profit driven, at times ignoring the innovation aspect of the blockchain industry.

Integrity

Ripple will never gain the backing or trust of the crypto community because of how it manages to supply of the XRP token and the fact that the project goes against pretty much everything that Bitcoin was created for.

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Token Mechanics

Token required

Ripple wishes for financial institutions to utilize XRP to transfer funds through its payments network. However, in light of the lack of XRP usage among Ripple customers, it begs the question how important the digital currency really is as part of Ripple's product suite.

Value added

Ripple's focus on bank-to-bank payments separates them from most blockchain projects. However, outside of Ripple's banking-focused ecosystem, there is little value in this digital currency as it is not, and likely will not, be used be consumers.

Decentralized

Ripple is a centralized organization. Although Ripple will argue that its network is decentralized, the fact remains that well over half of all XRP are kept in Ripple Labs.

Token supply

There is a maximum supply of 1 billion XRP tokens, 38 bln of which circulate in the market while the rest remain hidden in Ripple labs.

Public exchange

XRP can be found on nearly any major exchange including Coinbase, Binance, Gemini, and more.

MVP

Ripple has designed, built, and successfully implemented their Ripple Network for a variety of financial institutions.

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User Adoption

Technical difficulty

Attracting users to their software will be very labor intensive due to the nature of the finance industry. Financial institutions are typically conservative in nature, preventing them from accepting new technology without proper and thorough inspection. Ripple will have to break significant industry barriers in order to implement their products in financial institutions across the globe.

Halo Effect

Regardless of anyone's personal opinion of Ripple, it's difficult to deny their established relationships in the banking industry. They provide SaaS and other technological benefits to companies like American Express, MoneyGram, Santander, and more.

Buzz

Ripple recently announced that it hit a 300 customer milestone, citing increased interest and continued brand promotion as reasons for the uptick in its customer base. However, the public's perception of Ripple is understandably divided. Their practice of selling off XRP to fund its operations puts pressure of the price and thus, hurts XRP's retail investor base.

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Overall Score

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Blockchain Investor Analysis

XRP is one of the longest-standing digital assets in the market that has stood the test of time and continues to remain among the top digital asset measuring by market capitalization. However, XRP and its issuing company Ripple are not without controversy. The project will continue to fight an uphill battle against legacy payments providers as well as the crypto community, which is largely not a fan of Ripple.

The fact that the company is only profitable because it sells XRP it holds in the open market, paints an unpleasant picture for XRP holders who a regularly faced with selling pressure by the issuing entity.

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