Ripple (CCC:XRP-USD) has had a wild 2021, courtesy of the U.S. Securities and Exchange Commission.
The SEC alleged in December 2020 that all of Ripple’s sales of XRP had been one long unregistered securities sale. However, the lawsuit looks like it could be heading toward a “lackluster” conclusion, precisely why Ripple is doing so well recently.
Perhaps the biggest thing to come out of this lawsuit is that it could chart a new legal path for Ripple and other altcoins.
If the court proceedings are any indicator, it looks like Ripple will have a favorable outcome. However, there is a chance that things can go awry as well. For now, there is cautious optimism regarding Ripple’s odds.
I believe it is safe enough to initiate a small position in the digital coin. Ripple has been landing courtroom victories. You do not want to be caught in a situation where you do not have any XRP if the judgment is made in the cryptocurrency’s favor.
Play the Long Game With Ripple
XRP is at a price that is extremely low compared to the other big cryptocurrencies and its recent highs. It has got to do, mainly, with two factors.
One is the issue we have already discussed, that of the SEC lawsuit. The other is the state of the general crypto world, which is facing increased regulation and scrutiny. For example, China has prevented financial institutions and payment companies from providing services related to cryptocurrency transactions.
However, regardless of the regulatory activity, the utility of cryptocurrency is such that you cannot brush it aside.
Take Ripple as an example. At its heart, Ripple is a payments settlement system and currency exchange network that can facilitate transactions between a variety of fiat currencies, cryptocurrencies like Bitcoin (CCC:BTC-USD), and even commodities like gold. It is also one of the fastest-growing currencies despite being a late entrant to the game.
One of its most impressive features is the speed of transactions. Ripple enables you to complete a transaction in three seconds. Traditional systems would ask you to wait for days. Meanwhile, sending Bitcoin can take anywhere from seconds to more than 60 minutes.
It can handle more than 1,500 transactions per minute with incredible accuracy and consistency. It is scalable for the same throughput as major financial systems such as Visa (NYSE:V).
In addition, it takes just 0.0001 XRP to complete a transaction, very cost-effective when you compare it to traditional banking channels.
Most importantly, XRP enjoys wide institutional interest. Banco Santander (NYSE:SAN), Axis Bank, Yes Bank, American Express (NYSE:AXP), Bank of America (NYSE:BAC), and other notable corporations all over the globe.
Finally, XRP was designed with sustainability in mind and is one of the first truly carbon-neutral blockchains.
Is XRP Worth the Risk?
Now that we have established XRP has inherent value, the big question is whether you want to buy when the SEC case is still ongoing.
Make no mistake about it.
This is a high-risk investment at this stage. Even though headlines are positive, one cannot predict where the case will go. All things considered, Ripple is worth a small position in your crypto portfolio.
Even if proceedings do not go as planned, Ripple has enough utility to mount a rebound. But it’s not a risk worth taking a risk with lots of Ripple, in my eyes. But things are moving in the right direction for XRP, which will help it progress higher in the short run.
Our very own Brenden Rearick wrote a great article that went into some of the price forecasts offered by prominent players in the crypto space. Most of them are bullish, but again approach them with a bit of trepidation at this stage.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.