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Table of Contents
XRP is a cryptocurrency that runs on the XRP Ledger, a blockchain created in 2012 by Jed McCaleb, Arthur Britto and David Schwartz.
It can be bought as an investment, as a coin to exchange for other cryptocurrencies such as Bitcoin, or to finance transactions on the Ripple payments system—created by Britto and McCaleb as an alternative to leading money-transfer network SWIFT.
It’s important to note that cryptocurrencies are subject to volatile price swings and are not for everyone. Australian consumer groups, including CHOICE, warn against scams and huge losses within the investment industry and are advocating for greater consumer protection.
The Federal Government’s Moneysmart website advises investors of the risks of crypto and the need for due diligence.
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What Is XRP and How Does It Differ From Ripple?
XRP is a cryptocurrency that functions as the native token of the XRP Ledger (XRPL), a decentralised, open-source blockchain designed to facilitate fast, efficient, and cost-effective global transactions. Created by Ripple Labs, XRP was designed to be used to enhance cross-border financial transfers and the exchange of multiple currencies.
It’s crucial to note that while XRP is often referred to as “Ripple,” the two are distinct entities. Ripple is a technology company that utilises XRP in its solutions whereas XRP is an independent digital asset that operates on the XRP Ledger.
Unlike many other cryptocurrencies, XRP has a pre-mined maximum token supply of 100 billion, with approximately 55% currently in circulation. As of May 11, 2024, investors are paying $US0.50 per XRP token, down 85% from its 2018 all time high price of $US3.40.
How to buy XRP in 4 steps
1. Choose a crypto exchange or broker
Both a crypto exchange and a crypto broker can help you buy XRP, but the two are slightly different.
An exchange is a platform on which buyers and sellers can trade cryptocurrencies. A broker is an interface that interacts with exchanges on your behalf.
Some exchanges only deal in crypto, so if you’re new to investing and need to buy crypto using fiat currency (AUD in Australia), make sure you choose an exchange that accepts it.
If you choose a broker instead, be aware of its rules around moving your assets off a brokerage platform. Some brokers don’t allow you to move your holdings out of your account, which is typically a red flag in the eyes of most crypto investors. Moving crypto assets into a private wallet, especially a hardware wallet, enables investors to adopt security best practices and the self-custody ethos strongly advocated among experienced hands.
2. Choose a payment method
Most exchanges let you add funds to your account from your credit or debit card, bank account, crypto wallet or other payment service. Transaction fees may apply, and your payment method may affect the amount you’ll pay.
When you use a credit card, the card issuer treats it as a cash advance, which is subject to a higher rate of interest than a normal purchase.
3. Buy your XRP
Within your chosen exchange, head to the XRP market and enter the amount you would like to purchase. Most exchanges allow you to use either a market order or a limit order.
A market order will execute immediately, buying your XRP at the market rate when you press buy. A limit order works slightly differently, allowing you to choose the price at which you want to buy. You could set the price lower than the market price and hope XRP dips down to fill your order.
It is important to note that if the price you set the limit order at doesn’t get hit, your order could sit dormant until it expires. In this case, you will not buy any XRP and will keep your initial capital.
4. Select secure storage
Unlike a bank account holding fiat currency, cryptocurrencies like XRP aren’t protected by the Financial Claims Scheme (FCS). This means you would not be immediately entitled to reimbursement if your XRP were stolen, you lost your access codes, or the exchange or broker went bust.
A broker may not give you a choice about where your XRP is stored, but while an exchange may provide an integrated crypto wallet, you’re free to store it in wallets elsewhere—whether ‘hot’ or ‘cold’.
Hot wallets are stored online, making them more convenient but also more exposed to hackers.
Cold wallets are external storage devices such as hard drives or solid-state drives. They’re arguably more secure, but if you were to lose your own access codes, you may never be able to access your assets.
Whichever you choose, you may be charged a fee for exporting your XRP to an external wallet.
Should you invest in XRP?
When considering an investment in XRP, it is essential to understand the project’s background and current situation to assess whether it would fit into your portfolio properly. Ripple stands out in the crypto world as a project that operates in both the traditional financial system and the new blockchain technology paradigm.
Ripple’s payments system aims to create an efficient and cost-effective alternative to the existing SWIFT banking system by using blockchain technology for value transfer. However, the company is currently entangled in a legal battle with the US Securities and Exchange Commission (SEC), which has impacted the price of XRP for several years.
While the case has had some positive outcomes so far, it is yet to be completed, and the outcome for Ripple is yet to be seen. Many experts highlight that, depending on what happens, there is both a bull and bear case scenario for Ripple. Experts will point to XRP’s value appreciation if the case is resolved positively. However, if the case is not resolved in Ripple’s favour, it could be all over for XRP.
Either way, the uncertainty surrounding its legal status, combined with the possibility of a decline in interest once the legal narrative no longer dominates headlines, could lead to decreased demand and a fall in price. Moreover, concerns about the utility and necessity of XRP within Ripple’s payment system raise questions about its fundamental value proposition.
Ultimately, investing in XRP requires careful consideration. Prospective investors should weigh everything against their personal risk tolerance and investment objectives.
Alternative ways to invest in XRP
Buying shares in a company that either directly or indirectly operates in or adjacent to the blockchain industry can give you exposure to the movements of cryptocurrency. These companies can range from crypto exchanges to Bitcoin mining operations to companies involved in the tech behind digital assets.
Nvidia (NVDA), for example, is a manufacturer of graphics processing units that cryptocurrency miners use. Coinbase (COIN) is a popular crypto exchange that allows users to buy, sell and trade cryptocurrencies.
There are many publicly listed companies that have some connection to the digital asset sector, so there are many options out there for investors seeking the more familiar route of investing via the stock market. There are also now crypto exchange-traded funds (ETFs) that track the prices of cryptocurrencies directly. For example, BTC and Ether ETFs are listed on Cboe Australia, which investors can access via their share trading platform or broker.
Whatever way you decide to invest in cryptocurrencies, be sure to do your own research and consider whether cryptocurrencies or crypto-adjacent companies are the right investment for you. It is crucial to consider your circumstances and goals before moving forward, and if you are unsure about anything, speak to a professional financial advisor.
Note: Nvidia and Coinbase are used for illustrative purposes only. This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.
Frequently Asked Questions (FAQs)
Can anyone buy Ripple (XRP)?
It’s not easy to buy Ripple if you’re in the US. As of early 2021, XRP has been unavailable on most centralised US exchanges due to Ripple Labs’ legal battle with the Securities Exchange Commission. Outside the US, there are no limits or rules on who can or can’t buy Ripple. It’s up to you whether you wish to invest. You just need to choose a reputable crypto trading platform and set up your account. Be sure you know what you’re doing though: many people have lost a lot of money in crypto by trying to get rich quickly, and alt-coins, such as XRP, can be even more volatile than Bitcoin or Ether.
What is the best place to buy Ripple (XRP)?
There is no single best place, or easiest way, to buy Ripple. Do your homework and find a crypto trading platform that suits your needs. Pay special attention to fees, customer service, the platform interface, reputation and security protocols. Some crypto traders are more comfortable with an exchange that is locally registered, as it’s more likely to accept Australian dollars and be registered with AUSTRAC. Remember that investing in any crypto carries huge risks and it is still un-regulated in Australia.
When is the best time to buy Ripple (XRP)?
That is a question that only you can answer and it depends on your readiness to invest in crypto, as much as it does on the market cap of XRP. The best time to buy any cryptocurrency is when you’re fully aware of the individual coin’s risks and history, understand the crypto space as a high-stakes gamble, and are prepared to lose all of your invested money.
Where is the safest place to buy XRP in Australia?
There are several well-regarded platforms where Australians can safely purchase XRP. It’s important to choose a platform that’s reputable, secure, and easy to use. Some of the most widely used crypto exchanges in Australia include Binance, CoinSpot and Swyftx. However, the safest platform will also depend on your specific needs and circumstances. Always make sure to do your due diligence before deciding on any particular platform.
Which Australian banks use Ripple?
Australian Commonwealth Bank (CommBank), the largest financial conglomerate in Australia, announced in November 2022 that it would begin migrating cross-border payments to the ISO 20022 standard, a standard already met by Ripple. Furthermore, the National Australia Bank (NAB) started to adopt the ISO 20022 standard through RippleNet earlier in 2022.
These developments suggest that these major banks will move towards utilising Ripple’s technology for cross-border transactions in the future. However, this does not necessarily mean they will use XRP for cross-border payments.
What is the best app for buying XRP in Australia?
Several apps offer Australians the ability to purchase XRP. The “best” app can be subjective as it depends on your personal preferences and requirements. Some popular apps include CoinSpot, Swyftx and Binance, all of which offer a user-friendly interface, security features, and the ability to trade a variety of cryptocurrencies, including XRP. However, you should research and compare different exchange apps to determine which is most suitable for your needs.
Should I keep my XRP in a wallet?
Storing your XRP in a wallet is advisable for several reasons, primarily for the added security and control it offers over your assets. This practice, known as self-custody, ensures that you, and only you, have access to your digital assets. Wallets can be classified into two main types: software wallets and hardware wallets.
Software wallets, also known as hot wallets, are accessible through the internet and offer convenience for regular transactions. However, due to their online nature, they are generally considered less secure than hardware wallets. Hardware wallets, or cold wallets, store your private keys offline, providing a higher level of security by safeguarding your assets from online hacking attempts.
By using a wallet, especially a hardware wallet, you embrace the fundamental cryptocurrency principle of self-custody, ensuring that your XRP is securely stored under your control and not left in the hands of a third party.
Which wallet is best for XRP?
Hardware wallets are often recommended for XRP because of their enhanced security features. Hardware wallets store your private keys offline, making them immune to online hacking attempts. This cold storage method is considered one of the safest ways to store cryptocurrencies. Ledger and Trezor are the leading choices due to their reliability and robust security measures, however, there are also other options available.
Reputable software wallets are another option. Often called “hot” wallets, these offer convenience and ease of use for daily transactions, though they may not provide the same level of security as hardware wallets. Ultimately, the best wallet for you will depend on your specific needs, including the balance you wish to maintain between security and convenience.
Is XRP legal to buy?
Yes, it’s legal to buy XRP in Australia, however, the Moneysmart website reminds investors that cryptocurrencies are risky. It’s also essential to be aware of the ongoing legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC). The SEC alleges that Ripple conducted an unregistered securities offering through the sale of XRP, which Ripple denies.
The outcome of this case could have implications for XRP’s legal status in the United States, which could also influence the stance on XRP from Australian authorities. As always, it’s crucial to conduct thorough research and consider your personal risk tolerance before investing in any cryptocurrency
How much will one XRP cost in 2030?
Predicting the exact price of XRP or any cryptocurrency in the long term is essentially impossible due to the highly volatile and speculative nature of the market. Factors such as regulatory changes, technological advancements, the global macroeconomic outlook and market sentiment can significantly impact the price of XRP on a day-to-day basis, let alone over years. Additionally, the ongoing legal case between Ripple Labs and the SEC creates uncertainty around XRP’s future.
It is essential for investors to conduct their own research, consider their risk tolerance, and make informed decisions based on their financial goals.
