How to Buy XRP: A Clear and Confident Guide
XRP is a cryptocurrency that has been gaining momentum in recent times. With a rise in value of over 110% since the beginning of the year, it has become an attractive investment option. Created in 2012 by Jed McCaleb, Arthur Britto, and David Schwartz, XRP operates on the Ripple XRP Ledger, a blockchain that has been specifically designed for this purpose.
Apart from being an investment option, XRP can also be used to exchange for other cryptocurrencies like Bitcoin or to finance transactions on the Ripple payments system. The latter was created by Britto and McCaleb as an alternative to the popular money-transfer network, SWIFT. However, it is important to note that investing in cryptocurrency requires appropriate financial advice and only investing what one can afford to lose.
What is Ripple (XRP)?
Ripple is a payment system that utilizes crypto technology to validate transactions. It serves as an alternative to SWIFT, a global system used by some financial institutions. Ripple users pay transaction fees using XRP, its native cryptocurrency.
Why Invest in XRP?
Investors who wish to use Ripple for its intended purpose must purchase XRP to pay transaction fees on the network. Additionally, some people buy XRP to speculate on its price. XRP is currently trading at 58p, with a peak of £1.99 in January 2018. Since the beginning of 2023, XRP has increased in value by approximately 110%.
How to Buy XRP in 4 Steps
To buy XRP, investors must follow these four simple steps:
- Choose a Crypto Exchange or Broker
- Choose a Payment Method
- Buy XRP
- Select Secure Storage
Choose a Crypto Exchange or Broker
Investors have the option of choosing a crypto exchange or broker to buy XRP. While both options are viable, they differ slightly.
A crypto exchange is a platform where buyers and sellers can trade cryptocurrencies. On the other hand, a broker is an interface that interacts with exchanges on behalf of investors.
When choosing an exchange, investors should ensure that it accepts the currency they plan to use. Some exchanges only deal in cryptocurrencies, so investors who need to use fiat currency should choose an exchange that accepts it.
Investors who opt for a broker should be aware of the broker’s rules regarding moving assets off the platform. Some brokers do not allow investors to move their holdings out of their account, which may not be ideal for investors who want to store their XRP in a crypto wallet for added security.
The Financial Conduct Authority (FCA) provides a list of registered cryptoasset companies that investors can consult when choosing a crypto exchange or broker.
Choose a Payment Method
Most exchanges allow investors to add funds to their account using various payment methods such as credit or debit cards, bank accounts, crypto wallets, or other payment services. However, transaction fees may apply, and the payment method used may impact the amount the investor has to pay.
Investors using a credit card should be aware that the card issuer may treat it as a cash advance, which may result in additional fees and a higher interest rate than a typical purchase.
Once investors have chosen an exchange or broker and a payment method, they can find the XRP currency within the platform and enter the amount they wish to invest.
Select Secure Storage
Unlike a bank account holding fiat currency, cryptocurrencies like XRP are not protected by the Financial Services Compensation Scheme (FSCS). Therefore, investors would not be entitled to reimbursement if their XRP were stolen, they lost access codes, or if the exchange or broker went bust.
Brokers may not give investors a choice regarding where their XRP is stored. However, while exchanges may provide an integrated crypto wallet, investors are free to store their XRP in wallets elsewhere, whether “hot” or “cold.”
Hot wallets are stored online, making them more convenient but also more vulnerable to hackers. Cold wallets, on the other hand, are external storage devices such as hard drives or solid-state drives. They are arguably more secure, but if an investor loses their access codes, there may be no way to access their assets.
Investors should also be aware that there may be charges and fees for exporting XRP to an external wallet.
Some Alternative Ways to Invest in XRP
Investing in XRP can be done in various ways, including buying and holding XRP tokens or trading them on cryptocurrency exchanges. However, there are alternative ways to invest in XRP that may be of interest to investors.
One alternative way to invest in XRP is to buy shares in companies that use or own cryptocurrencies and the blockchain technology that powers them. This approach may be perceived as more secure since the companies are subject to regulatory scrutiny. For instance, Nvidia is a graphics processing unit manufacturer used by cryptocurrency miners, and PayPal allows users to buy and sell select cryptocurrencies.
It is important to note that investing in publicly traded companies is not a guarantee of making money or even recouping an investment. Investors should also keep in mind that cryptocurrency is unregulated in the UK, and the Financial Conduct Authority has warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.
An online investing platform may be of assistance to get started. However, investors should always do their research and exercise caution before investing in any cryptocurrency-related company.
Frequently Asked Questions (FAQs)
Is XRP a Safe Investment?
The Financial Conduct Authority (FCA) warns potential investors that cryptocurrency investments are highly volatile and risky. The UK government has also announced its intention to regulate cryptocurrencies in the same way as gambling, stating that cryptocurrencies have no intrinsic value and serve no useful social purpose. As XRP is an unregulated cryptocurrency, consumers have no protection or recourse if the exchange they use goes bust. However, in principle, XRP is as safe as any other cryptocurrency, including Bitcoin and Ethereum.
What are Some of the Easiest Ways to Purchase XRP?
Crypto exchanges like eToro and Coinbase are among the easiest ways to purchase XRP. Once an investor has set up an account and funded it with fiat currency, they can buy XRP. Getting started as a beginner via an exchange’s website or app should take no more than 30 minutes.
How is XRP Used?
XRP is primarily used to pay transaction fees on the Ripple network. Some people use XRP to buy other cryptocurrencies, while others hold XRP to speculate on its value.
How Does XRP Differ from Other Cryptocurrencies?
XRP is designed to be faster, cheaper, and more scalable than comparable cryptocurrencies like Bitcoin and Ethereum. XRP transactions can be validated faster than Bitcoin and Ethereum transactions, allowing more transactions to be validated within the same timeframe, making the Ripple network more scalable. Additionally, transaction fees are lower than Ethereum’s.