XRP’s Future: Predictions for the Next Three Years

The cryptocurrency landscape has been quite eventful this year. The presidential election victory of Donald Trump last November triggered a surge in most cryptocurrencies, as he has shown support for the sector and pledged to transform the U.S. into the global hub for crypto, a promise he is attempting to uphold. However, cryptocurrencies also face a complex macroeconomic environment, grappling with whether inflation is under control, remains high, or may rise again.

Among cryptocurrencies, XRP (XRP -5.14%), the third-largest crypto globally, has outperformed many, with a rise of about 390% in the last year. Despite its notable performance, investors are divided on whether XRP has more potential for growth or if it has peaked too quickly. What will XRP’s position be in three years?

Can XRP Transform International Payments?

In evaluating cryptocurrencies, investors tend to favor those built on robust technical frameworks, and XRP certainly meets this criterion. Unlike Bitcoin, which uses a proof-of-work consensus mechanism, or Ethereum, which employs a proof-of-stake system, XRP operates on a model known as a unique nodes list. This system relies on a selected list of nodes—computers or devices participating in the network—to validate transactions and generate new blocks.

This setup means XRP utilizes significantly fewer nodes than traditional blockchain networks, enabling quicker rectification of erroneous transactions. While some crypto purists may view this as a drawback due to reduced decentralization, it contributes to XRP’s efficiency, allowing it to process up to 1,500 transactions per second (TPS), according to Ledger Academy.

Another compelling aspect of XRP is Ripple, the company that created the token. Ripple has developed its own suite of products, using XRP to connect cryptocurrency with traditional finance, enabling banks and businesses to facilitate cross-border instant payments. Ripple has established RippleNet, designed to compete with SWIFT, the global interbank messaging system that banks rely on for payment instructions.

RippleNet offers communication software for interbank transactions, real-time liquidity, and an application programming interface (API) for easier integration into the network. Ripple’s CEO, Brad Garlinghouse, stated that crypto’s provision of real-time liquidity enables banks to reduce the need for pre-funding international accounts, offering greater flexibility regarding regulatory capital and liquidity requirements. Corporate clients may also favor a less decentralized network for easier correction of payment errors.

What Lies Ahead for XRP in Three Years?

Given the inherent volatility of the crypto market, making long-term forecasts is challenging. However, I anticipate that Ripple will attract more corporate clients and expand its ecosystem, likely boosting XRP demand. The critical challenge ahead is whether it can capture a substantial volume of SWIFT transactions while fending off competition from other networks with higher TPS capabilities.

Ultimately, I believe XRP is here to stay in the next three years, influenced to some extent by Bitcoin’s performance, which I see as an indicator for the sector. While XRP is intriguing, I currently perceive it as a relatively speculative investment owing to its volatility and the uncertainty surrounding its potential market share in traditional international payments.