How to Buy Ripple (XRP) – A Beginner’s Guide
Last updated: 12/18/18
XRP, commonly referred to as Ripple, has been gaining momentum as one of the leading cryptocurrencies around. In this guide I’m going to give you an overview of Ripple Labs, the company behind Ripple, the cryptocurrency XRP, and list the different ways it can be bought online.
XRP, Ripple’s cryptocurrency, can be bought in the following way:
- Get a Ripple Wallet (e.g. Ledger Nano S, Edge)
- Get your XRP address
- Go to Coinmama and sign up
- Buy XRP using your credit card
Keep in mind that every Ripple wallet requires an initial 20 XRP deposit to prevent the creation of fake accounts. You won’t be able to access this deposit after your initial purchase.
If you want a thorough explanation of Ripple, XRP and the buying process keep on reading. Here’s what I’ll cover:
- What is Ripple?
- Buying Ripple in 3 steps
- Conclusion – is Ripple a good investment?
The banking system today uses outdated and slow systems to transfer money between institutions. Ripple aims to be the “Internet of value” – A set of rules (i.e. protocol) that financial institutions can use in order to move money around the world as quickly as information moves through the Internet.
The Ripple Transaction Protocol (RTXP) supports two types of currencies – IOUs and XRP. IOUs represent debt (i.e. I owe you). XRP is a cryptocurrency aimed mainly at financial institutions so they can convert their funds into and transfer it quickly to other institutions around the world.
As for the performance of the Ripple network, aka RippleNet, an XRP transaction takes 4 seconds on average and the network can process up to 1500 tx per second.
A few banks have already embraced the Ripple platform: Santander, Axis Bank, Yes Bank, Westpac, Union Credit, NBAD, and UBS, among others. According to Ripple, banks can save an average of $3.76 per payment by using their protocol. Considering that banks perform thousands or perhaps millions of transactions every year, this represents significant savings.
As it currently stands, Ripple is one of the most exciting Fintech organizations with their innovative financial platform, as Forbes even includes Ripple in their Fintech 50.
While large scale investors may be able to invest in Ripple directly, most other investors and speculators are limited to investing in XRP, Ripple’s native currency. XRP took off in value in 2017 when it went from under $0.01 to over $0.30 a coin. This huge surge in value is due to both bank adoption and speculative interest.
The goal is to turn XRP into a stable currency that doesn’t deviate in value much, so banks would be comfortable moving into it without fear of volatility. As it stands, many banks don’t want anything to do with XRP because it can dramatically change in value overnight or even in seconds.
A long-term appreciation in the value of XRP is ultimately the end game strategy for Ripple, as they hold the majority of XRP in existence. This means that a bet on XRP is a bet on Ripple.
While XRP has some huge advantages over other cryptocurrencies, some would argue that it is a big brother platform for making global transactions. Since the original vision of Ripple was focused on allowing everyday people to make global transactions, like remittance payments, inexpensively and quickly, the pivot to focusing exclusively on banks was seen as a turnoff by many.
Anyone who likes the Ripple platform but doesn’t like Ripple – the company, may want to use Stellar, a Ripple fork by Jed McCaleb, as it has more of an altruistic vision.
The first thing you’ll need to do before purchasing XRP is to get a wallet that will be able to store XRP. As with most cryptocurrencies you have the option of choosing a software wallet or a hardware wallet.
Software wallets are free programs that are usually considered less secure and therefor are suitable for smaller amounts of money.
Toast Wallet is a self hosted easy to use wallet that can hold XRP. The wallet is available for mobile (iOS, Android) and desktop (PC, Mac, Linux).
Edge – Formerly known as Airbitz, Edge is a mobile wallet (iOS, Android) that can store several cryptocurrencies, including XRP.
For maximum security it is best to keep your XRP on a hardware wallet. The Ledger Nano S is currently the only reliable hardware wallets for storing XRP as well as a number of other cryptocurrencies. You can read our review about it here.
It should be noted that every Ripple wallet must initially be funded with a 20 XRP reserve in order to protect against low level spam attacks.
Once you have you Ripple wallet it’s time to create your XRP address which you will need later on. An XRP address is a string of 25-35 characters that starts with an r and is case sensitive. For example: rPspuKM5rCw5EkRDD9vGL816V15DwtSa3L
There are several options for buying Ripple today. You can either buy XRP with fiat currency (i.e. USD, EUR, etc.), trade Bitcoins for XRP on specific exchanges or you can invest in XRP indirectly through a fund.
Invest in Ripple via a trading fund
Platforms like eToro allow you to invest in XRP indirectly however you don’t have access to your coins and you can’t send coins from eToro to other people. The only thing that can be done with the platform is to buy and sell Ripple for fiat currency (i.e. Dollars, Euros, etc.).
To put it simply, eToro is a good option only if you want to speculate on the price. At the time of writing, this method is only valid if you live outside of the US.
IMPORTANT! If you use eToro you don’t actually need a Ripple wallet as they don’t supply you the actual coins. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Keep in mind that your capital is at risk.
Buy Ripple With Fiat Currency
The best way to buy Ripple for people who don’t already own Bitcoin is to purchase it directly via a wire transfer or a credit card.
Coinmama also allows you to buy XRP with a debit card, credit card or SEPA transfer. The company is a well established broker that started operating back in 2013. You can read our full Coinmama review here.
CEX.io allows you to quickly buy XRP via your credit card or a wire transfer. CEX is a London-based cryptocurrencies exchange and has been around since 2013. You can read our full review on CEX as well.
Bitstamp is probably the oldest exchange around that also supports XRP trading. You can deposit money to Bitstamp through Wire, SEPA transfer and a credit card. The reason Bitstamp is less recommended for beginners is because unlike Coinmama and CEX.io, Bitstamp supplies only a trading platform and not a brokerage service. Trading platforms usually have a confusing interface for people who aren’t advanced users.
Buy Ripple with Bitcoin (trade BTC for XRP)
Throughout the Ripple community, the consensus is that the least expensive way to purchase XRP is by buying bitcoin and then trading it for XRP.
The easiest way to trade Bitcoin for XRP is by quickly exchanging it on Binance. Kraken and Bitstamp are additional popular exchange that allow users to trade bitcoin for XRP, however, their verification process requires more time.
I wouldn’t recommend leaving your XRP on the exchange you bought them from. This is due to the fact that you don’t actually control the private key for your coins and therefore they are not actually yours.
No matter where you got the coins from, remember to withdraw them into your own Ripple wallet that you hold the private keys to. Once the transaction is confirmed you’ve successfully finished the process of buying Ripple.
Ripple will probably appeal to larger banks throughout the next couple years, as they offer a fast scalable global payment network while reducing transaction fees.
XRP has the potential to earn huge returns on their investment IF Ripple keeps making headway throughout the banking sector (and that’s a big if). Aside from XRP banks can also choose to opt-in to RippleNet but use IOUs instead of XRP (more on IOUs in the video at the beginning of this post).
So while Ripple’s future currently looks bright, XRP’s future is still unclear (as with most cryptocurrencies). Remember that where there is great reward there is also great risk involved. Please make sure to invest responsible as I’ve outlined in the past.