In the last decade the world has been introduced to cryptocurrencies, with Bitcoin being its main face. Investors saw in digital currencies a possibility to profit from their price changes and the strength they started to take. In addition to the investment market, cryptocurrencies have also brought technological innovations with the aim of making currency exchanges more secure and faster.
Japan was one of the countries strongly conquered by digital currencies and their modern technology. Although Bitcoin is the most popular currency, another cryptocurrency, called Ripple, also played an important role in the Japanese financial landscape. However, it has been affected by the instability that cryptocurrencies can suffer.
Understand what Ripple is
Before understanding what happened to Ripple in Japan, it is important to know the characteristics of this coin. Ripple (XRP) is a payment protocol developed in 2012 by the company OpenCoin. While Bitcoin and other cryptocurrencies are intended to be decentralized currencies, independent of any bank or government, Ripple came up with a slightly different proposition. To explore this, we need to understand how cryptocurrencies work.
From the blockchain, a modern technology that aims to secure and fast financial transactions through an interconnected computer network, cryptocurrency transfers take place. These transactions are validated based on consensus among users participating in the network. Thus, there is no superior institution controlling the entire process.
This rupture with the institutions was one of the main innovations that Bitcoin sought to bring, in order to present more security for all who trade currencies. The idea was that having digital currencies would be more guaranteed than having traditional currencies, always susceptible to social and political conditions. Among some main factors, we can mention the fact that governments or banks can suddenly go bankrupt or withhold citizens' money for some reason.
Ripple, on the other hand, is a payment system that, together with modern cryptocurrency technology, seeks to incorporate itself into banks. That is, Ripple itself is also decentralized and its transactions take place in the same way as we explained above. However, the developers of Ripple present the objective of introducing this system to banking institutions, so that banks can also take advantage of the agility of transactions in this system and adapt to this new technological wave.
Ripple has its own cryptocurrency of the same name, also known by the acronym XRP. Despite this, this payment protocol accepts transferring and converting any currency - traditional or digital - be it Euro, Dollar, Bitcoin ... With this, since the adoption of the Ripple system by banks, cryptocurrencies are increasingly entering traditional means.
Differences between Ripple and Bitcoin
XRP, or Ripple, is today one of the top three digital currencies on the world market, and is second only to Bitcoin and Ethereum. The payment protocol mentioned here is innovative, but its currency has also been presented as an investment possibility. Like Bitcoin, Ripple today is also part of the portfolio of several cryptocurrency investors. But what are the differences between Ripple and Bitcoin?
There are a few main points that differentiate these two digital currencies. As we have already explained, one of the main differences is that Ripple came up with the proposal to merge cryptocurrency technology with banking institutions, whereas Bitcoin origin it aimed precisely at the opposite path.
In addition, while Bitcoin goes through the mining process, Ripple is a currency that is issued by OpenCoin itself, the company that created it. That way, your transactions are much faster than the processes involving Bitcoin and other cryptocurrencies. In the case of Bitcoin, transactions can take up to 10 minutes to happen on the network, as they depend on the block's mining time. Transfers in Ripple happen almost instantly, in a matter of seconds.
This is even one of the main attractions for banks. We know that taking a bank transfer takes some time. When the transfer is between different banks, or even different countries, we pay high fees and the process doesn't even take place on the same day. With the adoption of the Ripple system, the idea is that the bank can carry out agile transactions between anywhere in the world.
Ripple in Japan
The Japanese market has been one of the biggest supporters of Ripple and its technology since its creation. Several banks have tested their system for international transactions. However, for some time now, Ripple has been losing its place.
The “Ripple's army”, as engaged currency fans are called, had many supporters in Japan. For a time, Ripple was the largest cryptocurrency in terms of trading volume in the country.
Bitcoin's popularity around the world is great, but in Japan it was Ripple that attracted the eyes of investors and, mainly, of banks. Payment solutions from the Ripple system enable secure, fast and transparent transfers, so that countless banks and financial companies nationals started to experiment with Ripple in their transactions.
However, from a certain point, Ripple began to lose its popularity among the Japanese, who, like the rest of the world, began to pay more attention to Bitcoin.
Much of this is due to the depreciation of the price of Ripple. Throughout 2019, the value of Ripple fell, while Bitcoin almost doubled. In this movement, Ripple's presence also began to decline in Japanese investors' portfolios, which seemed to give preference to Bitcoin investments. In addition, it is also important to mention Ethereum in negotiations in Japan, which is one of the most traded cryptocurrencies today.
Currency of exchange or investment?
Due to the poor performance of the currency, we saw the demand for Ripple drop in Japan. Ripple has been losing its share as an asset, but, on the other hand, it may not leave the scene that fast.
We cannot forget that at the core of the creation of cryptocurrencies was the intention to revolutionize the means of payment. They came up with that idea of decentralizing money and facilitating transactions quickly and securely. The movement in the purchase and sale of digital currencies for investment purposes was a consequence.
Especially in 2020, with limited travel, we can see a demand for technologies that facilitate communications between countries. In the case of financial transactions, Ripple already has a good infrastructure developed for fast and low-cost transfers across borders. It is difficult to predict whether this digital currency will resume its position in Japan and the rest of the world, but the current scenario may favor a certain recovery of Ripple, as a possible growth in the adoption of its technology contributes to the appreciation of its currency.