Forget Bitcoin. So long Litecoin. There’s a new cryptocurrency on the rise.
Ripple, which was designed for banks and global money transfers, has seen the value of its XRP digital currency skyrocket in the past three days. On Dec. 10, the company had a market capitalization of just over $9 billion. As of Wednesday morning, that market cap had more than doubled to $18.1 billion.
Prices for an individual Ripple XRP are considerably more affordable than its alternatives, making it even more attractive to cryptocurrency speculators. As of late Wednesday morning, a single XRP cost just 47 cents, a 66% jump from yesterday’s close, according to CoinMarketCap.
This surge has pushed Litecoin down to the fifth most valuable cryptocurrency. Both Ripple and Litecoin are still far below Bitcoin and Ethereum, however.
What is Ripple?
While it wasn’t released until 2012, Ripple is actually older than Bitcoin. The original version of the company was created in 2004, according to Bitcoin Magazine. It never really went anywhere, though, until it put a professional management team in place, which included E-Loan co-founder Chris Larsen and Jed McCaleb, founder of MtGox.
Ripple’s cryptocurrency has been adopted by banks and other financial institutions. Those companies believe Ripple’s system offers both better prices and is more secure than other digital currencies, including Bitcoin. It allows users to send, receive, and hold any currency in a decentralized way via the Ripple network. The company is cash-flow positive and holds a vast store of XRP, which it periodically releases into the market.
But the real appeal of Ripple’s XRP for banks is its liquidity.
“The liquidity needs of banks today is managed with literally ten trillion of float that sits in these nostro and vostro accounts. We believe very strong this is an inefficient model. You can use digital assets to fund liquidity, and Ripple is uniquely positioned to capitalize on that. Bitcoin takes four hours to settle a transaction. XRP takes 3.6 seconds,” Ripple CEO Brad Garlinghouse told Fortune earlier this year.
Why is Ripple surging?
Ripple’s rise seems to be a (pardon the pun) ripple effect from the surge of interest in Bitcoin. Investors who believe cryptocurrency may be reaching a peak are looking for others that could provide a greater return in the long term. The company has hit some notable milestones in recent months, though.
As of October, Ripple had licensed its blockchain technology to over 100 banks. Last month, American Express came on board. And Michael Arrington’s $100 million cryptocurrency hedge fund will be valued in Ripple’s XRP.
How much has Ripple grown in 2017?
Year to date, Ripple’s XRP has seen its value jump more than 7,000% and its market cap increase by nearly 7,700%.