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What is Ripple?
Ripple was originally designed as a payment solution using blockchain technology which aimed to solve issues impacting digital payment systems. Ripple fulfils a global need for a Cryptocurrency that facilitates cross-border payments without the usual costs and delays associated with other currency transfers.
Ripple is the Cryptocurrency that has been embraced by some of the leading names in international banking, like Santander, American Express and Standard Chartered, who want to use Ripple for their own cross-border payments.
The potential for the growth of Ripple is considerable as it seeks to a common currency that can support other transactions. The fact that the big institutions are backing it means it is fulfilling a need within the payments ecosystem.
Ripple transactions are a lot quicker than many other Cryptocurrency transactions – for buyers of the physical currency, a transaction can take seconds rather than hours or days.
How to trade Ripple
Many people are using Ripple to make international payments already, but it can still be cumbersome to trade Ripple on a regular basis using a wallet. You can take advantage of the price volatility to trade on price movements of Ripple using CFDs.
Ripple has a real world value in currency, which will go up and down over time. This is the amount of another established currency (for example USD) one Ripple unit can be exchanged for.
- Without owning: take advantage Ripple price volatility without the need for a wallet
- Volatility: react more quickly to changes in price without owning Ripple
- Leverage: trade Ripple with only a small initial investment
Ripple can be traded around the clock, as it does not depend on a particular market being open.
Be aware, however, that using leverage to trade Ripple means you will be more exposed to changes in the price. Make sure that you keep stop losses in place to protect yourself against sudden price reversals and you are aware of what your total exposure to the Ripple price is.
Buying vs trading Ripple
Buying Ripple requires the use of specialist Cryptocurrency platforms and a Cryptocurrency ‘wallet’ to store your currency in.
Trading Ripple using a CFD allows you to react even more quickly to price changes and take advantage of short term volatility. You don’t need to own Ripple to be able to trade its price.
Factors impacting Ripple
There were some early concerns about what might happen if the banks in the Ripple network dumped a large amount of the Cryptocurrency on the market. As a consequence, the network has stored 55 million in smart contracts (a reserve of the currency) which is being fed into the market at the rate of 1 million every month.
This process copies the effect of mining with other Cryptocurrencies but Ripple itself is not a Cryptocurrency that relies on mining to sustain itself. It is first and foremost a payments platform.
Is Ripple risky?
Ripple is a volatile market and although this presents opportunities for traders it can also represent risks. Both buying and trading Ripple involves risk.
- Ripple has high volatility and sharp price fluctuations are very likely
- Leveraged trading can magnify both your profits and losses
The price of Cryptocurrencies like Ripple can surge and fall dramatically and this represents one of the biggest risks to traders, the extreme volatility within Cryptocurrency markets. Cryptocurrency markets are currently much more volatile than almost any other market and when excess volatility crashes, you can be faced with significantly larger losses than you anticipate.
Because there are often a limited amount of reputable digital asset exchanges and no single reliable price source for Cryptocurrencies like Ripple, this could, in theory, cause prices to tumble sharply. Ripple is also a very new asset so we don’t yet know how it may perform in a major financial crisis.
It is also possible that certain governments may ban its citizens from holding Ripple with the effect that the price may collapse.
Furthermore, there is a possibility for large scale cyber-attacks on digital asset exchanges which are likely to have a strong, short-term impact on the price of Cryptocurrencies.
Investors involved in trading Cryptocurrencies should also be aware of the potential for a so-called “51 percent attack”. A 51 percent attack refers to one centralized mining operation gaining over 50% control of a blockchain which would allow the operation to reverse transactions making the entire blockchain unusable.
If you have further questions about trading Ripple, please see our Crypto FAQs
Ripple price movements
As with other Cryptos, it is important to understand that the ‘rules’ affecting the way Ripple is mined and processed can be changed suddenly, and this can have a big impact on the price, for better or for worse.
Cryptocurrency forking policy
In the event that the current cryptocurrency splits into two, new cryptocurrencies are created, this is known as a hard fork. We will generally follow the cryptocurrency that has the majority consensus of cryptocurrency users and will therefore use this as the basis for our prices. In addition we will also consider the approach adopted by the exchanges we deal with, which will help determine the action we take.
We reserve the right to determine which cryptocurrency unit has the majority consensus behind them.
As the hard fork results in a second cryptocurrency, we reserve the right to create an equivalent position on client accounts to reflect this. However, this action is taken at our absolute discretion, and we have no obligation to do so.
If the second cryptocurrency is tradeable on major exchanges, which may or may not include the exchanges we deal with, we may choose to represent that value, but have no obligation to do so. We may do this by making the product available to close based on the valuation, or by booking a cash adjustment on client accounts.
If, within a reasonable timeframe, the second cryptocurrency does not become tradeable, then we may void positions that had previously been created at no value on client accounts.
Over periods of substantial price volatility around fork events, and we may take any action as we consider necessary in accordance with our terms and conditions including suspending trading throughout if we deem not to have reliable prices from the underlying market.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.
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