Should You Buy XRP (Ripple) Right Now With $100 and Hold Through 2024 and Beyond?

As the world's two most valuable cryptocurrencies, Bitcoin and Ethereum receive most of the attention from the investment community. But there are under-the-radar digital assets to also be mindful of, such as XRP (CRYPTO: XRP).

This innovative cryptocurrency has performed well since its inception more than a decade ago. But it currently is 86% off its peak from January 2018. Should investors take advantage of the current situation, buy XRP with $100 right now, and hold through 2024 and beyond? It's worth looking at both the positives and negatives before drawing a conclusion.

Taking on financial services

According to CoinGecko, an online crypto tracker, there are almost 15,000 different cryptocurrencies out there. I don't think it's a bold assertion to say that the vast majority -- probably nearly all of them -- are useless, scams, or don't add any value to society. Over a long-enough time frame, they will likely see their market caps approach zero.

This just means that for a particular cryptocurrency to raise its chances at long-term survival and success, it must have a real-world use. Here's where XRP has some potential.

XRP is a cryptocurrency that facilitates cross-border money transfers. Someone could convert their local currency, say U.S. dollars, into XRP before sending it to someone in a different country, who then converts it into their home currency. Because the crypto is built on blockchain technology, XRP transactions are extremely fast and cheap. That's what makes it stand out.

There's an upside because the market for money transfers is gargantuan. The Migration Data Portal estimates that $857 billion in global remittances were sent in 2023. This doesn't include the money that bigger institutions -- like companies, banks, or governments -- move from country to country. That market is likely measured in the trillions of dollars on an annual basis.

It's not hard to see that even if XRP commands just a small sliver of this huge opportunity, demand for the token could soar. And with it, the price could rise as well.

Image source: Getty Images.

Clear risks

While XRP might have serious potential, investors can't ignore some important downside factors that can derail the bull thesis. I think there are three clear risks today.

Regulatory issues remain a top concern. XRP has been under scrutiny as the Securities and Exchange Commission (SEC) argued that its initial token sales violated securities laws. A judge imposed a small-than-expected $125 million fine on Ripple, the company that operates XRP. But the SEC wasn't happy with that ruling, and the agency recently filed a notice of appeal. This could be the beginning of years of legal battles, adding lots of uncertainty.

There are also competitive forces to pay attention to. XRP is trying to upend a key aspect of the financial services industry. The huge banks aren't going to sit around idly and let a newcomer disrupt what is probably a big moneymaker for them. It could take a lot of time and effort until XRP scales up and gains trust and more adoption.

When it comes to cryptocurrencies, we can't forget technical risks, either. Blockchain technology is still relatively new. And there is still a lot to prove, particularly around reliability and scalability. Networks experiencing outages or hacks isn't uncommon. This is a real threat that could undermine everything that XRP has accomplished.

The investor's perspective

At the end of the day, whether you should spend $100 to buy XRP depends on your risk tolerance. If you are bullish on the token, it makes sense to buy a small position as part of a well-diversified portfolio.

I take a different stance. I think there's too much uncertainty over the next few years, so I'll gladly pass.

Should you invest $1,000 in XRP right now?

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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.