Ripple is rapidly establishing itself as the ‘go to’ digital currency after Bitcoin, having surged past ethereum and reaching a market cap of more than $100bn.
Ripple passed ethereum’s market cap of $73bn on Friday, almost doubling in price from $1.29 to $2.19 – although Bitcoin is still way out ahead with a market cap of roughly $247bn.
At the beginning of December, Ripple (the actual currency is called XRP) was trading at just under $0.25. Today (3 January) it rose a further 18% from $2.19 to $2.60.
Bitcoin was holding fairly steady at just over $15,000, up 9% on the day, while ethereum was fluctuating at around the $880 mark.
Whereas Bitcoin and ethereum are opensource operations, using peer-to-peer networks to operate, Ripple is owned by a California-based company of the same name, and is aimed at the financial sector.
It has already established itself as a firm favourite, being used by banks such as Santander, Bank of America and UBS.
Unlike Bitcoin and ethereum, it isn’t ‘mined’ – generated by competing individuals or firms, whose prize is the creation of new currency. Ripple is controlled by the company, which has created 100 billion XRP, with roughly 38 billion in circulation.
Potential for inflation
The company has the power to create up to 1 billion new coins each month.
However, Stephen Powaga, head of research at investment firm Blockchain Momentum, told CNN Money there was a risk Ripple could flood the market.
“It's somewhat concerning for me because if they chose to release them as quickly as possible, within a little over four years, you'd see more than a doubling of supply of Ripple,” he said.
“I'm not certain that some of the newer market participants are fully appreciating the potential for inflation.”
For now, however, nothing is holding back the new kid on the block.