Bitcoin is once again hitting historic highs in a year that has been particularly eventful for cryptocurrency, and it's far from the only cryptocurrency rocketing up in recent months.
XRP (XRP -3.03%) has surged roughly 50% in the last two months as investors have piled into the world's third-largest crypto by market cap. For all the excitement as the coin hovers right below $3, it's easy to forget the days when it was worth much, much less. So how much has it risen in the last five years?
On Aug. 18, 2020, XRP was trading around $0.30. It's risen a whopping 970% since then. If you had invested $500 five years ago, it would be worth $5,350 today.
Should you buy XRP now?
XRP was created to fix many issues that legacy banking faces. It was designed to make transactions, especially those across borders, faster and cheaper. The primary pitch from XRP bulls is that as the wider banking industry adopts the technology, it will create demand pressure for XRP, and the price will rise.
Image source: Getty Images.
The problem is that many investors misunderstand how XRP and its technology work. The fact is that most banks make use of its related blockchain technology without ever having to touch XRP itself -- meaning that as the technology's use in the broader financial system rises, XRP's price won't necessarily follow suit.
This issue could get even worse as stablecoins gain popularity in banking and the financial system. Much of what XRP offers can be gained by using stablecoins, and parent Ripple itself is pivoting to make the use of its own stablecoin easier for its customers. While over the last five years XRP has risen 970%, I don't think investors should expect a similar bump over the next five years.
