What is Ripple?
Ripple acts as a transaction protocol that enables a digital payment network for global financial transactions. The payment system is built on distributed ledger technology, or blockchain, established by Bitcoin.
The Ripple protocol was built by a team of developers with rich backgrounds in Bitcoin. It was released in 2012 by OpenCoin, a company founded by Jed McCaleb and Chris Larsen.
Like Bitcoin, Ripple is a peer-to-peer open source payment system. Global banks, digital asset exchanges, payment providers and corporates use it as a cross-border settlement infrastructure. The Ripple protocol is used by over 100 top clients, including UniCredit, Santander, UBS, RBC, etc.
The Ripple Consensus Ledger is decentralised, with a network of institutional validator run by Microsoft, the Massachusetts Institute of Technology and world’s top banks.
The payment network has its own internal currency that goes by the same name – Ripple (XRP). It acts as a bridge currency facilitating the exchange of fiat (traditional) currencies, such as USD and cryptocurrencies, including Bitcoin. Thus, Ripple is the world's first decentralised exchange.
Transactions on the Ripple network are not based on mining protocol. In other words, the only way to obtain XRP is from various exchanges. The total supply of Ripple – 100 billion XRP – was created when the project was released. Every new transaction destroys a small amount of XRP to pay the cost.
In comparison to such traditional currencies as USD or EUR, Ripple doesn’t depend on any central banks or governments. These currencies are backed and issued in the USA and in the EU by the respective financial bodies.
The key benefit of Ripple is that it provides a lightning-fast transaction settlements speed. The consensus protocol powering the Ripple ledger settles transactions within 4 seconds.
Ripple vs Bitcoin
- Open source and peer-to-peer
- Enable irreversible transactions
- Secured with cryptography
Why trade Ripple CFDs with Capital.com?
- Trade without owningWe offer Ripple CFDs, meaning that you can speculate on the rising or falling prices for the XRP without owning the cryptocurrency itself.
- Go long or shortYou can get the best of Ripple CFDs trading in any circumstance, whether XRP falls or grows in value.
- Comfortable leverageAn attractive leverage of 1:2 helps level up the size of your positions and gain exposure to the Ripple CFDs market.
- Handy and timely updatesRegularly updated charts and timely push notifications enable you to invest in CFDs on Ripple smart.
The Capital.com platform encompasses a lot more features that give a smooth trading experience:
- SmartFeed with bias detection and personalised content
- Segregated accounts to keep clients' money separate and safe
- Personal data protection and negative balance protection
How to trade CFDs on Ripple?
- Choose a market.Decided on trading XRP via CFD contracts.
- Do research.Study Ripple charts, explore fundamental and technical analysis.
- Decide to go long or short.Go long, that is buy a CFD, if you think Ripple will grow in value. Conversely, go short, or sell a CFD, if you predict XRP to decrease in value.
- Open the position.Set the size of your contract in line with your risk tolerance.
- Place a stop loss.Protect yourself from the market moving too far against you.
- Follow the price movements.Keep an eye on the price behaviour using real-time quotes and regular updates, provided by Capital.com.
- Close the position.If your predictions of the price are right, then you generate profit. In the opposite situation occurs, you suffer losses.
Let's say you want to trade a CFD on Ripple (XRP) which is currently at $0.75/$0.80. After careful research, you forecast that Ripple will rise in value. You decide to buy (go long on) 1,000 Ripple CFDs at ask price of $0.80.
Over the course of time XRP grows by $0.1. Your predictions were correct. Now Ripple is at $0.85/$0.90. You close the position by selling 1,000 CFDs at the new XRP bid price of $0.85.
To calculate your profit, multiple the size of your position (1,000) by the price difference ($).
1,000 X ($0.85-$0.80) = $50