Understanding XRP
Like other types of cryptocurrency, XRP is decentralized, but it's closely tied to the technology company Ripple. Ripple has developed a public blockchain called the XRP Ledger (XRPL) and a blockchain-based global payments platform called RippleNet, both of which use XRP.
XRP is the native cryptocurrency on the XRPL, meaning it's the primary token on that blockchain and is used to pay transaction fees. RippleNet uses XRP as a bridge currency for international transfers, which is potentially this crypto's most exciting use.
However, partnering with Ripple doesn't mean these banks are adopting XRP. Large banks generally don't need a bridge currency for international transfers. They send money through RippleNet because of the speed and low costs, but they aren't actually converting funds into XRP at any point. In addition, financial institutions that use cryptocurrency for money transfers will likely opt for stablecoins instead of XRP. Stablecoins aim to maintain a fixed value, such as $1; the price of XRP can fluctuate quickly.
XRP could still gain value for its role as a bridge currency or for its role on the XRPL. It may be a multibagger, or it could plummet in value. That's par for the course when investing in cryptocurrency. If you decide to buy XRP, limit it to a small amount of your portfolio to keep your risk manageable.
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