Nine billion dollars is quite a sum to lose off the value of a cryptocurrency in the space of a few days, but that is exactly what has happened to XRP (also sometimes referred to as Ripple). This drop followed a previous spike in value, after a report on CNBC that the company would shortly be launching their new money transfer product based on the currency live.
What exactly is Ripple?
Ripple is the name that XRP is most commonly referred to and known by, although it’s generally agreed to be incorrect – to be pedantic, Ripple is the digital payment protocol that XRP (the currency itself) sits on. The cryptocurrency was launched in 2012 by Chris Larsen and Jed McCaleb, and the open source platform offers decentralised and fuss-free money transfers in any fiat or digital currency.
What is xRapid?
In short, the cause of the spike, and the subsequent trouble. There has been a considerable buzz around the xRapid platform, which has been designed and launched to make international payments faster, and to remove the requirement of a pre-funded account to do so. When the pilot stage of the project was launched in May of 2018, participants reported savings on the transactions they made of up to 70%, as well as a much speedier user experience – times were, on average, cut from two days to two minutes.
With news like that getting around, it’s no wonder that xRapid spiked interest as well as having a knock on effect and a spike on XRP’s token price. The issues that led to the crash really started when US bank PNC announced that their Treasury Management Unit were going to use the existing xCurrent platform to speed up transactions cross-border, ahead of the launch of xRapid. With transactions suddenly seamlessly happening in real time, the spike might not be seen as the surprise that some have described it as.
On the day the price spiked, XRP’s price jumped to $0.69. Many of those holding XRP took the opportunity to cash out a profit, and when the market capitalisation eventually settled, the price of the digital coin had dropped more than 30%.
There’s no reason to be concerned about Ripple; market forces cause stock prices to change every single day through supply and demand and it’s simply the case that many token holders fancied a return on their investment. Quite often, investors get out of a stock fast because of controversy, or because they get wind of trouble. In the case of Ripple, the dip can be seen as a positive; the news of a new development was so positively received that the price rose. The theories of why stock prices rise and fall are many and varied – no doubt there will be more fluctuations as xRapid establishes, but in the long run the price will find its level.