There aren't too many cryptocurrencies that belong in nearly everyone's portfolio. Still, even if XRP (CRYPTO: XRP) experiences many of the same pitfalls as other cryptos, like extreme price volatility and a fairly uncertain long-term picture, it is looking like an increasingly attractive place to invest, even if it's with a smaller amount, like $1,000 or so.
Especially if you're able to hold your coins through volatility and commit to not selling for many years, there's likely a lot of upside. So here are three reasons it's probably worth investing $1,000 in this coin and never looking back -- at least not until you've seen a big return on your dollars.
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1. An ever-growing network of collaborators and users
XRP's mandate is to make it easier for banks and other financial institutions (and perhaps governments) to transfer money, especially across international borders. The idea is for the coin to capture a tiny fragment of value with each transaction in the form of fees.
For that to work, the coin needs to be widespread among those target users. Since they tend to be fairly conservative in terms of what technologies they adopt, even getting users on board on a preliminary or trial basis is a strong sign that XRP has real value that's likely to increase over time. And that's exactly what has been happening.
You have probably heard of many of those already using XRP to process their transfers, either on an initial basis or permanently. Major financial players like Banco Santander, Bank of America, and American Express are engaged with it today, along with a smattering of other international financial institutions from the U.K. to India and even China.
And there are likely to be more of those heavyweight players over time, which is a big part of the investment thesis for buying this coin.
2. Strong relationships with regulators make life easier
Cryptocurrencies like XRP haven't always had good relations with regulators. Ripple, the organization behind XRP, was sued by the Securities and Exchange Commission (SEC), which claimed that the coin was being sold as an unregistered security. Ripple may not be completely out of the woods yet, but there is a strong sign that its fortunes are improving.
Under the new presidential administration, regulators seem to be far more amenable to working with XRP and other cryptocurrencies rather than trying to restrict their freedom of use.
Brad Garlinghouse, the founder of Ripple, is making the most of the changing of the guard. He met with the president last month and has now earned a seat on the newly created cryptocurrency advisory council.
It isn't guaranteed that XRP's value will increase immediately if Garlinghouse is appointed to that council, but that isn't the point. The winds are changing in the coin's favor, and regulatory actions may soon become a tailwind rather than a headwind.
And the U.S. isn't the only place where XRP is making inroads with governments. In Japan, the United Arab Emirates, and Singapore, each of which are important global financial hubs, the coin is already treated under at least some of the regulatory framework that best supports its future value rather than constraining it. Over time, the impact from these relationships may be quite significant and positive for investors.
3. It's superior to competitors
Lastly, XRP is worth a $1,000 investment today because it's very obviously a better option than some of the legacy money-transfer systems it aims to replace.
In particular, the main network for processing international money transfers, the Society for Worldwide Interbank Financial Telecommunications (SWIFT), is inferior to XRP for its intended purpose.
Transactions via SWIFT take up to five business days to clear; XRP payments clear within minutes. SWIFT transactions cost from $10 to $30 or more, plus international exchange fees, which are charged as a percentage of the transfer's total value; XRP's transactions cost less than a penny, and they don't incur any added fees from currency exchanges because no currency conversion is taking place.
SWIFT is a legacy technology, and it won't be around forever if there are superior alternatives like XRP. And that will be a long-term driver of the crypto continuing to gain in value, so it's worth getting some investment exposure as that happens.
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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and XRP. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
