Between 1848 and 1855, thousands of people flocked to California in what became known as the California Gold Rush. Some, but not all, became wealthy as they staked claims to promising goldfields.
There's something similar going on today. Many individuals are drawn to cryptocurrencies in the hopes of becoming wealthy. XRP (XRP +4.47%) ranks among the most popular. Is this crypto token potentially a millionaire maker?
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What it would take
Before we attempt to answer this central question, let's first examine what it would take for XRP to make a cool $1 million. There's an old joke that the easiest way to make $1 million is to start with $2 million. This isn't the approach any investor would prefer, though.
Instead, let's assume an initial investment of $10,000. A 100-fold gain would be required to grow this modest upfront amount into $1 million.
XRP's market cap currently hovers around $173 billion. Multiplying that amount by 100 equals $17.3 trillion. No cryptocurrency even comes close to meeting that threshold today, including the granddaddy of crypto, Bitcoin, with a market cap of nearly $2.3 trillion.
Delivering a 100-fold return isn't unheard of in the crypto world, though. Bitcoin has delivered a gain of more than 485 times in just the last 10 years, enough to grow an initial investment of $10,000 into roughly $4.85 million. XRP has also soared, but not as much as Bitcoin.
CRYPTO: XRP
Key Data Points
How XRP could potentially be a millionaire maker
How could XRP potentially be a millionaire maker? Perhaps the most straightforward path is to follow in Bitcoin's footsteps by becoming increasingly attractive as an alternative asset for investors.
The creators of XRP -- David Schwartz, Jed McCaleb, and Arthur Britto -- set out in 2011 with a goal of developing a better version of Bitcoin. They sought to launch a digital asset designed specifically for payments that addressed some of the limitations of Bitcoin. By most counts, they succeeded.
XRP doesn't require mining as Bitcoin does. It's much faster, taking only three to five seconds to settle a payment versus around 500 seconds for Bitcoin. It's significantly cheaper, with transaction costs of $0.0002 compared to $0.50 for Bitcoin. XRP is also more environmentally sustainable thanks to its minimal energy consumption.
One important milestone for XRP to become more like Bitcoin is for exchange-traded funds (ETFs) to own the digital token. That could be right around the corner, with the U.S. Securities and Exchange Commission (SEC) potentially on the cusp of approving spot XRP ETFs within the next few months.
President Donald Trump could make it easier for XRP to be a millionaire maker with a recently signed executive order. He directed the Secretary of Labor to revisit regulations that prohibit the ownership of alternative investments, including cryptocurrencies, in 401(k) plans and similar defined-contribution retirement accounts. This move could create significant growth in demand for XRP and other cryptocurrencies.
What are the odds?
It's possible that XRP could be a millionaire maker, even with an initial investment of $10,000. But is it probable? I don't think so.
Offering advantages over Bitcoin doesn't necessarily mean that XRP will achieve similar success as Bitcoin. Many digital tokens are demonstrably better than Bitcoin in multiple ways, but still have much smaller market caps and significantly lower adoption rates.
Positive regulatory developments don't always lead to surging crypto prices, either. As a case in point, XRP developer Ripple and the SEC recently agreed to drop their litigation over the status of the cryptocurrency as a security. However, this didn't spark a major rally for XRP as many investors had anticipated.
Most importantly, XRP already ranks as the third-largest cryptocurrency based on market cap, trailing behind Bitcoin and Ethereum. It's much easier for an under-the-radar digital token to deliver ginormous gains, but XRP certainly doesn't fit that description now.
Overall, I suspect the odds of XRP turning $10,000 into $1 million in the next 10 to 20 years are quite low. That said, the cryptocurrency could nonetheless be a winner for investors willing to take on a considerable amount of risk.
