Unless you are new to cryptocurrency you may or may not have heard of $XRP or Ripple and the recent ripple effect this has had on cryptocurrency. The Securities and Exchange Commission recently cleared ongoing litigation with XRP over it being deemed a security versus a commodity and the leadership team was allowing unregistered securities. This is big news and may help in how certain future cryptocurrencies are regulated.  Let me explain what XRP is, the difference between commodities and securities, why XRP is important, why you should put this on your watchlist, and how to buy it currently.

The History of XRP or Ripple

Jed McCaleb originally came up with the idea of Ripple in 2011, calling it OpenCoin; With the help of Arthur Britto and David Schwarts. Ryan Fugger changed the name from OpenCoin to Ripple. Unlike other cryptocurrencies Ripple is not made up of a blockchain, instead, the mechanism is done by a hash tree. The benefits are that Ripple cannot be mined, this makes the cryptocurrency valuable due to a limited number of coins and fast transactions. The Ripple model is consensus-based, meaning that nodes or servers validate the transaction. In contrast, Bitcoin (BTC) uses a proof or work method, in this method miners must complete complex equations through a blockchain as proof to add to the block. Think of a train that’s connected with a coupling and that’s BTC.

Due to the advantages of Ripple many banks and payment processors utilize XRP. This alone will explain why the ruling by the SEC was a major win for the Ripple community and cryptocurrency. Also, some may say isn’t cryptocurrency the bank killer and wouldn’t this be bad for decentralization, I would argue that Ripple was never really decentralized but more “centralized”.

What is XRP or Ripple

Ripple (XRP) is a money-transferring network and digital currency that makes fast and seamless transactions. In today’s age, it is important to be able to get transactions of your assets or payment as quickly as possible.

Difference Between Commodities and Securities

Commodities are raw materials used to make the products consumers buy. Examples include wheat, cattle, oil, natural gas, and in this case certain cryptocurrencies. Commodities can be bought, traded, or exchanged. Securities are a fungible financial instrument that holds value, makes a yield of return for companies, etc. Examples include stocks, bonds, options, etc. Securities can be purchased on a stock market; commodities can be bought as a futures contract(s).

Without going too much into detail, in the US commodities are regulated by the Commodities Futures Trading Commission (CFTC) and securities are regulated by the Securities and Exchange Commission (SEC).

The Importance of This Ruling

Why does this matter? Remember that XRP was going through a lawsuit with the SEC for being a “security”, well since it was ruled not a security, you’ve guessed it, it is a commodity. Commodities tend to be taxed more favorably which means more money to keep for us, the retail investor.

Why You Should Keep This on Your Watchlist

Any investor’s goal is to buy low and sell high but also to mitigate risk. Therefore, if something costs less and you can keep more money, wouldn’t you think the price should increase? Also, any asset that can overcome regulation for their benefit, might be something to invest in.

Furthermore, remember how I mentioned banks and payment processors are utilizing XRP for their fast transactions, this benefits not only XRP, but the banks so wouldn’t they want a piece of the action? This of course is only speculation, and no one will know how XRP will go, but I am bullish for these reasons. In addition, in the past, you could only buy XRP on a few platforms, but with this ruling that will change and therefore increase the influx of investors in Ripple.

How Can You Buy XRP

Decentralized way:

Make sure to get a wallet, I explain wallets in detail in one of my other blog posts (Click Here). After you have your wallet, you can purchase on a decentralized cryptocurrency exchange and the only way to do that is by having your wallet. Typically, you would need USDT or some coin to exchange for XRP. Decentralize takes some experience, please do your research before purchasing, there is no customer service at all. There is also XRP Ledger which you can buy XRP directly in their ecosystem/community (Home - XRPL.org).

Centralized way:

Purchase on centralized exchanges, I also wrote about the differences between centralized and decentralized (Click Here), you can use fiat money from your bank account or wallet(s) to get verified and purchase your assets, and most centralized exchanges allow you to transfer your assets to a hot or cold wallet. I currently utilize Uphold ( Click Here) to buy XRP.

The centralized way is the easiest and usually, if you have an issue, you get customer service. Also, some exchanges are cheaper depending on where you buy the assets so make sure to investigate the places you choose. With the ruling of the SEC, Coinbase should have XRP listed to buy also.

Conclusion

The XRP ruling was a major blow to regulation by the SEC and other institutions. For the cryptocurrency community and Ripple community, this win helps in the fight for less regulation that takes money away from retail investors and more regulation that is beneficial for retail investors.

Those who have been in crypto for a while can agree that some regulations may be needed, and others may not. In either case, I would say cryptocurrency is here to stay, the big three to me are still BTC, ETH, and XRP. Why? Because all of these were ruled commodities by the SEC. Remember this is only for educational use and you should do your research, I am not a financial advisor. Investing comes with risks. ALL THE BEST!!!