As its holders already know thanks to its growth of 1,200% during the past five years, XRP (XRP +1.66%) is a great asset for buying and holding forever.
There are at least three reasons you should be considering the cryptocurrency for the longest holding period that you can imagine. There's also at least one (not great) reason to consider selling it right now, so let's dive in and examine the things that make it uniquely suited for retention.
CRYPTO: XRP
Key Data Points
1. It's meshing perfectly with the financial industry's many needs
Banks and other financial institutions have needs that differ quite a bit from those of a typical investor. For one, they need to transact with their peers across international borders, with high volumes, and with parties that have deep liquidity to handle currency exchanges for payments. They also need to hold vast amounts of all sorts of assets that normal investors only have in small portions, like U.S. Treasuries and other real-world assets such as commodities.
Transferring money internationally tends to be pricey, with costs that are frequently more than $25 per transfer. It also tends to be slow, taking days on average. And transferring the ownership of other assets can be an even larger nightmare.
XRP addresses these issues via its blockchain. Rather than paying currency exchange fees and money transfer fees, banks can simply hold XRP and transfer it to one another, incurring barely a pittance of a cost, and closing the transaction within just a few seconds.
The fact that they can now trade and trace real-world assets on XRP's chain is another reason those players will want to buy the coin, since they're already holding and transferring those assets with less efficient methods.
These features drive the adoption of XRP. And there's no chance that Ripple, the company that issues it, is going to stop with its tech development just because its coin is already fairly popular among the target demographic internationally.
Holding the coin means getting the upside from more demand for it, stoked by these future developments, as well as upside from more users seeking to take advantage of its features today.
2. It's supply is shrinking (slowly)
Every time anyone sends XRP or an asset that's tracked via XRP, it incurs a very small transaction cost. That cost is burned, meaning a tiny portion of a coin is permanently taken out of circulation.
Given that more of the coin is not being created, at least not so far, a shrinking supply matched with steady or rising demand puts upward pressure on XRP's value.
Over the short term, you probably shouldn't factor in the burned coins as being a major contributor to its value unless the protocol is altered to make XRP fees higher.
Nonetheless, over the long term -- and especially if the transaction volume on the chain increases significantly in the future -- this mechanism ensures that there's always a force pushing for the price to rise rather than fall, as each destroyed coin increases the value of all of those that remain.
3. The community is made of dedicated holders
In the cryptocurrency world, XRP's holder community is often the brunt of many jokes because they're perceived to have one defining trait (which is likely highly exaggerated): They simply don't sell. Look at this chart:
If you're like most people, you would be awfully tempted to sell the coin after those sharp downturns that follow price spikes, which preceded years in the doldrums. Yet out of delusion or conviction, many of XRP's longtime holders and evangelists simply held on through these periods. And, as you can see, they were rewarded for it.
The community is a large one, and it's spread across many social media websites; members tend to skew significantly older than the typical cryptocurrency demographics.
If you hold the coin, you can know that you're in good company, because there are a lot of investors who are in it for the long term, not a quick flip. And if everyone holds, new investors will be forced to buy at higher prices, so it's worth holding on to your coins, too.
One (bad) reason to sell: The next few months will be bumpy
Trouble has come to the cryptocurrency sector. With the specter of a trade war, macroeconomic difficulties, and a handful of other factors, sentiment is poor across the board.
That means XRP's price could continue to fall in the near term. And for some investors, that's a reason to sell it.
But smarter investors look to the horizon rather than toward the tip of their nose. Holding XRP for the next five years and beyond is much more likely to be a profitable strategy compared to selling your coins today.
