Ripple's XRP token climbed its latest price record today, pushing higher as investors flocked to the digital currency.
XRP tokens rose to as much as $1.90 at roughly 11:00 UTC (6:00 a.m.) today, according to CoinMarketCap.
At this price level, the digital currency had surged more than 46% over the last 24 hours, additional CoinMarketCap data shows.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
A Practical Investment
As for why the digital currency has been drawing interest lately, Mati Greenspan, senior market analyst for social trading platform eToro, emphasized that XRP is a practical investment.
“At the moment, it takes between 2 and 5 business days to transfer funds from one bank to another, whereas Ripple can process these transactions in seconds flat and for a fraction of the cost,” he stated.
Cryptocurrency trader Marius Rupsys offered a similar take on the situation.
Rupsys noted that he has spoken with some payment processors, and they are “pretty excited about the technology as it allows them to offer almost instant settlement and cheaper compared to current bank system.”
Greenspan noted that while investing in many cryptocurrencies represents a departure from the current financial system, “An investment on Ripple seems to be more level-headed because it's intention is to integrate with the current banking network and make it stronger.”
Changing Investor Preferences
Rupsys spoke to changing investor preferences, emphasizing that the retail and institutional investors who have been flocking to digital currencies have different priorities from the old guard.
He stated that:
Crypto community is expanding from early bitcoin adopters to mainstream and institutional investors. Early crypto investors were very much for decentralization, immutability and other libertarian ideas. New crypto participants do not hold same views as they are in crypto for different reasons – mainly financial incentives.
Rupsys emphasized that since Ripple is “centralized technology and pre-mined, therefore many early crypto participants did not like Ripple and would trade it only short term.”
However, he said that the newer retail and institutional investors have a different point of view, as they simply “buy what makes sense.”
A Cautionary Note
While Ripple's price has been skyrocketing lately, Iqbal Gandham, UK managing director for eToro, provided a cautionary note on these sharp gains.
“What people don't see is that it's success is based on keeping transaction fees low,” he emphasized.
“These fees are eventually linked to its price. You cannot have the price rise too much otherwise it's ability to lower the cost of transactions for banks disappears.”
Gandham added that “What that sweet spot is, no one has as yet calculated.”
Disclosure: I own some Bitcoin, Bitcoin Cash and Ether.