Ripple, which describes itself as “the only enterprise blockchain company today with products in commercial use by hundreds of customers in 55+ countries” and was founded in 2012, offers a payment settling software called Ripple Net. Ripple uses a cryptocurrency token known as XRP in order to settle transactions, and XRP has seen a rapid rise in popularity in recent years, particularly amongst banks. In fact, by 2018, over 100 banks had signed up to use XRP. Now, everyday investors are asking about the cryptocurrency as well. “Anytime you have a 65-year-old man from Long Island calling you up and talking to you about ripple, what that tells you is they are having those conversations with their friends,” says Ivory Johnson, CFP and founder of Delancey Wealth Management.
An increasingly large percentage of investors are looking to shift their holdings at least partially into crypto. “Four years ago, maybe 1 in 10 clients and prospects were coming in the door wanting to learn more about digital assets and cryptocurrency,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York, a firm that works mostly with millennials. “Today, in just four years’ time, I think it’s closer to 50%.” Given the volatility associated with many cryptocurrencies but also the high potential upside, many investors are looking for a more sure bet in the cryptocurrency market. Unfortunately for those who saw Ripple as a stable investment, the company has found itself embroiled in a lawsuit with the SEC regarding XRP, and, if things go south for Ripple, there is little to stop Ripple from simply using a different cryptocurrency for its Ripple Net system, thereby eroding the value of XRP.
The prospect of a decision from the SEC on the case coming sometime in 2022, combined with the inherently more centralized nature of XRP when compared to other popular cryptocurrencies, and the fact that Ripple still holds more than 50% of the supply of XRP, has caused many to divert their funds to other, more reliable, cryptocurrencies. It seems that XRP, if it exists at all past this year, is destined to remain a means of exchange, while cryptocurrencies like bitcoin will continue to be seen as a store of value.