Consistent saving and investing are fundamental for accumulating wealth over time. If you have $1,000 that isn't needed for daily expenses, you might want to consider investing it in the financial markets, where the potential gains can be substantial.
Take this as an example: if you had purchased $1,000 of the digital asset XRP ( XRP -4.08%) five years ago, your investment would have grown by over 1,000% by now.
Today, XRP boasts a massive $180 billion market capitalization. With such a significant size, investors shouldn't anticipate a repeat of the explosive growth it saw when it was smaller and more unpredictable.
However, XRP still appears well-positioned to outperform the broader market in the long run. Here are a few reasons why it remains a compelling investment.
Trust is paramount in the world of cryptocurrency
While it may be tempting to evaluate cryptocurrencies in the same way as stocks or other conventional assets, they are fundamentally different. Unlike publicly traded companies, XRP does not generate revenue or profits to underpin its value. Its price is determined solely by what others are willing to pay, making factors like longevity, credibility, and brand awareness critical to its enduring success.
Brand awareness is one of XRP's standout strengths. Since its launch in 2012—just three years after Bitcoin—it has distinguished itself by targeting practical uses in the payments sector.
With rapid transaction processing and minimal fees (just 0.00001 XRP per transaction, less than a cent), XRP is well-suited as a bridge currency for international money transfers. Although some newer cryptocurrencies offer even faster speeds and lower costs, XRP's early entry and strong brand have helped it retain its position as the third-largest digital currency by market cap.
A proactive development team
Another major strength of XRP is its development team at Ripple Labs. Unlike many crypto projects with anonymous or obscure creators, Ripple's leadership is public and actively works to enhance the network and explore new opportunities. This openness fosters greater trust and transparency, making XRP more appealing to both everyday users and institutional investors.
In August, the Securities and Exchange Commission (SEC) concluded its legal action against Ripple Labs regarding alleged securities law violations tied to XRP token sales in 2020. The settlement, which included a reduced $50 million fine for improper sales to institutional investors, has helped clear up regulatory ambiguity around XRP. This clarity could pave the way for new financial products such as exchange-traded funds (ETFs), enhancing the asset's liquidity and tradability.
Image source: Getty Images.
Ripple Labs is also developing other crypto products, such as RippleUSD, a stablecoin pegged to the US dollar. As RippleUSD gains traction, XRP stands to benefit since both use the same blockchain infrastructure and XRP is used to pay transaction fees.
In July, Ripple Labs advanced further by applying for a U.S. banking license, which would enable it to process payments more efficiently and bypass conventional payment networks. This could significantly enhance RippleUSD's potential by allowing direct asset custody with the Federal Reserve, and more importantly, strengthen the credibility and trust in XRP and Ripple's broader crypto initiatives. This step comes after the Senate approved the Genius Act, aimed at clarifying crypto regulations in the U.S.
What can investors anticipate from XRP?
Given its longevity and scale, XRP is often considered a blue chip digital asset. While it may not deliver the meteoric gains of meme coins, XRP is likely to offer more stable, gradual growth over time as it becomes further integrated into mainstream financial systems.
