🎉XRP officially replaced Tether and became the world's third largest cryptocurrency. What do you think?
XRP's recent price performance has been very strong, attracting the attention of many retail investors. Just yesterday, XRP officially surpassed Tether and ranked third in the world in terms of cryptocurrency market value. In less than a month, the price of XRP has risen by as much as four times.
XRP is a token issued by Ripple, which is completely different from ecosystems with smart contract functions such as Ethereum. The original intention of XRP was to replace the cash banking system and solve the slow and high cost problems of wire transfers in international trade. The traditional Swift system has slow transfers and high fees, usually taking 3 to 5 days, and the average fee is about 30 to 50 US dollars.
The advantage of XRP is that the transaction speed is extremely fast, which can be confirmed within 3 to 5 seconds, and it can process thousands of transactions per second. Although there is still a gap compared with the efficiency of mainstream payment systems such as Visa and Mastercard, it is already a very outstanding performance in blockchain technology. And XRP's transaction fee is extremely low, averaging about $0.0002, so the traditional Swift system cannot compete with it in terms of transaction fees alone.
However, the biggest disadvantage of XRP is its high centralization. It does not use a POW mechanism similar to Bitcoin or a POS mechanism like Ethereum, but a federal consensus mechanism, which means that a few people review all transactions, making the system vulnerable to cyber attacks and fraud, so this is also a major flaw of XRP.
Let's take a look at the XRP market. Although XRP has risen more than 4 times in the past month, its performance in the past few years has not been satisfactory. After reaching its high point in 2017-2018, its price has never reached a new high again, and it has been sideways for 6 years.
But it is worth noting that in 2018, XRP's market value once surpassed Ethereum, briefly becoming the world's second largest cryptocurrency, and the only cryptocurrency project that has surpassed Ethereum. This may also be the main reason why many XRP believers like it.
In short, when investing in the field of cryptocurrency, decentralization is the key for investors to evaluate projects, and it is also an important reason why we choose blockchain for asset allocation. Therefore, when considering such projects, investors should weigh their technical advantages and centralization risks.
