19 Jan Why Ripple is Substantially More Volatile Than Bitcoin?
Ripple (XRP) has been surprising investors since the start of this year, thanks to its big price swings compared to bitcoin and Ethereum. After hitting the highest level of $3.84 on Jan 4, ripple’s price moved back below $1 in Wednesday trade. Ripple was among the worst performers during the selloff, but the currency has also led the rally with the gain of more than 70% compared to its Wednesday lows.
The huge movement in ripple price was blamed on its centralized system, contrasting with other blockchains that have decentralized systems. China and South Korea are showing strong concerns over the centralized trading system, leading to huge movement in ripple’s price.
Ripple was developed with an aim to work like a bank in transferring payments from one location to another within a few seconds. Ripple has the potential to reduce excessive time on the bank to bank transfers. Moreover, transfer of funds through this centralized system also costs less compared to traditional channels.
Ripple’s latest partnership with MoneyGram highlights its ability to lower costs and improves the transaction time between friends and families.
Ripple’s CEO, Brad Garlinghouse, said “XRP remains the most efficient digital asset for payments with transaction fees at just fractions of a penny, compared to Bitcoin fees of about $30 per transaction. Similarly, the average transaction time for XRP is 2-3 seconds with other top digital assets ranging from 15 minutes to an hour.”
Due to its centralized nature and the potential to transfer funds in few seconds, people use ripple as a tool for the money laundering in South Korea and China.
Bloomberg reported on Monday that Chinese are planning to completely block all cryptocurrency platforms that allow centralized trading.
On the other hand, the ripple has been widely exchanging in South Korean markets, supported by its potential to transfer funds in few seconds from one location to other. On the whole, ripple’s centralized system is eventually turning out to be a threat to its acceptability and practical use. In the case, China and South Korea banned the centralized trading; it could have a long-lasting impact on the future of ripple.
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