How To Invest In Ripple - Step-by-Step Guide
XRP is the native cryptocurrency of a digital payment network knows as RippleNet or simply Ripple. It is an open-source project that, unlike many other cryptocurrencies, does not run on a blockchain but instead relies on a distributed XRP ledger. It uses a real-time gross settlement system or RTGS that ensures quick and secure international monetary transactions.
At the time of writing, XRP is trading at $0.5334 per coin which means it is a highly accessible digital asset for every type of investor. Since its inception, XRP has become a very popular cryptocurrency for day traders and long-term investors.
Table of Contents
Invest in Ripple in 3 Steps
Get a Ripple Wallet
It doesn't matter if you are looking to invest in Ripple or any other cryptocurrency, if you want to store your digital assets securely, you need a wallet. You can choose from a wide range of XRP wallets including cold and hot wallets. These offer a variety of features depending on what you value the most including reliability, accessibility, security and performance. Your job is to identify one that aligns with your investment requirements.
Join a Ripple Exchange
The next step you need to go through is finding a cryptocurrency exchange that sells Ripple (XRP). There are many high-profile crypto exchanges where you can purchase XRP coins. Keep in mind that first, you will need to deposit funds using a credit or debit card or bank deposit and then you will be able to purchase and invest in XRP tokens.
Invest in Ripple
Selecting your cryptocurrency exchange is just a start. You will need to sign up providing your data such as name, phone number and email address. Top exchanges will verify your identity by asking for documentation which may include a driver's license, passport, or ID card. This is done to ensure compliance with anti-money laundering and anti-fraud regulations. After verification, you will be required to deposit your seed capital which you can use to buy XRP coins.
Investing in Ripple Explained
As mentioned earlier, you can't buy Ripple without an XRP wallet. Before selecting a wallet, you will need to assess several essential factors to make an informed decision so the wallet you choose meets your investment goals and needs. Some of the most crucial variables include security, anonymity, ability to backup, customer care, private key control, ease, of use, and price.
Your nature of investment will dictate the type of wallet you need. For instance, if you are going all-in on Ripple for the long-term, then a hardware wallet is a better option since it offers fool-proof security ensuring the wallet isn't connected to the outside world through the web. Some of the top XRP wallets you can buy include Trezor, Ledger Nano X, and Ledger Nano S. However, if you are just going to store your XRP coins for a few days, then software or hot wallets can get the job done. You can get them in the form of mobile apps such as Atomic Wallet and Electrum.
If you want more features including accessibility and ease of use of mobile wallets, then desktop wallets are also an option. They work like software packages and are available for both Windows and macOS. Exodus is one of the most popular desktop Ripple wallets you can get. For day traders, the ideal wallet is a hot wallet that is built into the exchange or brokerage website they are using for crypto investing.
Another method of investing in Ripple that has been gaining popularity is P2P platforms that connect crypto buyers with sellers. There is a rating system on the platform so you can choose reputable sellers and you also have the option to negotiate your transaction terms including payment method, price, and more.
One important factor that you should bear in mind is that regardless of the platform you are trading on, top exchange and broker services will always ask for your personal identification. This may seem to be a hassle but this is done to ensure regulatory compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) guidelines. While this takes away your anonymity, it also ensures that you trade in a safe investing environment where you don't have to deal with scammers, money launderers, or cybercriminals.
Where Can You Invest In Ripple?
To shortlist the best of the most popular investment services, we reviewed a variety of platforms carrying out a thorough assessment of a multitude of features such as user-friendliness, affordability, regulatory compliance, coin variety, customer support and more. Here are our recommended Ripple investment platforms.
Both brokers and crypto exchanges present a number of payment modes to investors and traders which they can use for investing in Ripple. Depending on the platform of your choosing, these payment modes will differ from one service to another. That being said, if you are just starting out as a beginner investor, the best option you have is a credit or debit card. It may add to your transaction expense but it is the quickest and most convenient payment mode. You simply need to the deposit or fund tab and enter your credit or debit card details. Transfer the seed money into your account and start investing in Ripple.
Most exchanges also allow you to deposit funds from your bank account directly before you invest in Ripple. If you are going for that option, you need to choose the deposit option present in the wallet balance section, along with the preferred currency. After that, go to the bank account tab where you have to add your bank account. You'll be redirected to another page where you will complete the account verification process before you can deposit any funds and invest in Ripple.
Ripple Investment Strategies
There are a variety of ways to invest in Ripple ensuring you don’t miss investment opportunities. The following section provides the required details of all popular Ripple investment strategies along with when and how you can use them.
Buy and 'Hodl'
What is it?
'Hodl' or 'hodling' refers to an inside joke of the online crypto community. It is just the word 'hold' which has been misspelt. As the term would suggest, this strategy is all about purchasing Ripple and holding it for the long-term so you can gain major rewards in the future. Seeing the overall life-time ROI of XRP, it would be an understatement to say that the strategy has done pretty well for many investors who had the discipline and patience. Hodling might be the most effective investment strategy for inexperienced investors.
How to use this strategy
Putting ‘hodl’ strategy into action is quite easy. You just need to register and verify yourself on an exchange and buy XRP using the process described above. And then you hold your Ripple coins. As ‘hodling’ is a long-term strategy, you need to be disciplined and patient for the strategy to work. There will be moments where you would want to get out in the short term keeping your modest profits but you will need to resist the urge to give in.
When to use this strategy
The most effective way to rely on 'hodl' investment strategy is to get in when the price of Ripple is witnessing a decline. Buy XRP coins with your funds and hold them in a secure hardware wallet. You have to bear in mind that the cryptocurrency market is highly volatile so you will probably see many inclines and declines in XRP price. Don't let the unpredictability of the market impact you and hold onto your investment. Your discipline and patience are the only things that could help you in the long run.
Buy Ripple ETF/CFD
What is it?
ETF is a financial instrument that stands for Exchange-Traded Fund and it provides you with a simple way to invest in XRP. The instrument is widely used by stock investors as it tracks the price of the coin on the market. Generally, ETFs include more than one assets to diversify your portfolio for risk minimization. The subsequent increment and decline in the price of the assets that ETF represents impact its value. It is one of the most efficient ways to invest in XRP for those who don't want to deal with the hassle of learning about cryptocurrencies and the trading market.
Similarly, if you just want to bet on the price of XRP, you can use Contract for Difference (CFD) which allows you to buy a position without actually purchasing the coin. This facilitates you to invest without dealing with the issues that come with owning XRP and other cryptocurrencies like managing XRP wallet.
How to use this strategy
You can use this financial instrument strategy by registering and verifying your identity on a broker website. Some of the top brokerage services like Plus500 and eToro provide you with the option to buy and sell crypto financial instruments including ETFs and CFDs. You will need to verify your account as major scale trading partners comply with AML and KYC regulations to ensure they are providing a safe and secure investment environment.
When to use this strategy
If you are an individual or an investor who just wants to keep it all business instead of learning everything about the asset and dealing with its technicalities, financial instruments including CFDs and ETFs are for you. Owning Ripple or any other digital currency comes with a set of responsibilities like learning about wallets, blockchains, and other technical stuff which can be both time-consuming and difficult for most people. Investing in Ripple using financial instruments gets rid of that challenge.
Long Position on Ripple
What is it?
Long position trading is all about opening a betting position on the upward price movement of XRP. Long positions are often opened through leveraged trading which allows you to invest more money than you have in your account. This particular investment strategy is not recommended for those traders who are just starting out as it comes with a lot of risks and requires a deep understanding of the financial markets.
How to use this strategy
If you are interested in opening a long position on XRP, you will have to sign up on your preferred brokerage website. Enter the amount of your position and select your leverage's extent in terms of percentage. You will also have to specify the price of XRP at which you want to go in. Once the Ripple price hits that mark, your position will be opened and you can close it any time you want if the price continues to rise.
When to use this strategy
The long position and leverage trading strategy must only be used by experienced traders in a market that’s going through a bullish trend. When XRP token’s price is experiencing an upwards rally due to a multitude of market factors, you have the option to capitalise on that momentum if you know and understand the market dynamics. That’s why if you keep yourself in the loop and learn about market developments, you can identify good investment opportunities. That being said, minor price depreciation can also lead to liquidation if you are not careful. That’s why it is important that you only invest the amount you can afford to lose, especially if you are undertaking risky bets through leveraged trading.
Benefits of Investing in Ripple
- No Miners – Ripple is pre-mined which means that there are no miners who can completely overshadow the market by investing in commercial and industrial grade mining equipment.
- Global Transactions – The network called RippleNet can instantly transfer funds globally which makes Ripple one of the most practical cryptocurrency projects.
- Accessibility – Since XRP can be stored as a digital code on your wallet, the currency will remain accessible to you if you have access to your wallet with an internet connection.
- Autonomy – As RippleNet is decentralised, there are no central authorities such as the Federal Reserve or any financial institution that can take a cut. You have complete control over your XRP coins.
- P2P Transactions – Relying on P2P platforms, you can buy and sell Ripple directly to and from an individual which allows you to negotiate transaction terms.
- Strategic Partnerships – Ripple project has been able to strike partnership deals with many financial institutions that are now relying on RippleNet to process international transactions.
Disadvantages of Investing in Ripple
- High price volatility – Like other cryptocurrencies, Ripple is also prone to price volatility and market unpredictability. That’s why you must carry out due diligence.
- Beware of scams – Since the crypto and blockchain market is still in its early stage as compared to conventional financial markets and a lot of people don’t know the technology behind it, there are a lot of scams in this industry which you need to be aware of.
- Not As Decentralised As Other Cryptocurrencies – As all of the XRP tokens were created by the project, it takes away the democratisation of distribution.
Other Ways of Investing in Ripple
You can choose to buy Ripple tokens face-to-face from a seller whom you can find on a P2P network. Before you go for a face-to-face meetup, ensure that you are meeting in a public and safe place. Another way to invest in Ripple is through ATMs if you have one in your area. To find the ATM near you, you can use the ATM Radar website. One more option is PayPal, however, it is currently not available in many countries.
Trade Ripple on Leverage
Leveraged trading enables you to invest more in Ripple than your seed capital. Your investment capital is amplified by a certain rate selected by you and you can gain more profits. That being said, you must be very wary as the greater your leverage, the more prominent the risk of liquidation, even with minute price movements. This trading method must be utilized through a crypto broker, for example, eToro, Plus500, Skilling and more.
Frequently Asked Questions
Yes. Long term investors should consider using a wallet for safely storing XRP tokens.
The most effective way to manage your crypto investment risks is to invest in more than one coins that have a good future outlook.
Maybe. It depends on the country you live in. If there have been regulations and laws related to the taxation of crypto trading gains, then you might need to pay the taxes.
Unfortunately, you cannot mine Ripple. The cryptocurrency has an overall supply of 1 billion XRP tokens which have been pre-mined. The Ripple Project has issued a fraction of the tokens through ICO and those who are major contributors.
The investment platforms including brokers, P2P services, and exchanges choose to comply with KYC and AML laws that help them prevent any fraudulent or illegal activity on their platform. While this may be a little inconvenient, it also ensures you get a healthy and safe investment environment where your funds remain secure.