Is It Worth Investing In Spark FLR?

Last Updated August 30th 2021
17 Min Read

Ripple's XRP is one of the most popular cryptocurrencies right now. Ripple was created to be a global payment network that makes it easy for people to send and receive money quickly and usually utilizes the XRP Ledger (XRPL). And while XRP is great at what it was created for, it has limited use cases making it basically useless for other types of functionalities.

This is where the Flare Network comes in.

In particular, the Flare network tries to expand the utility of the XRP token by making it compatible with smart contracts

The Flare Network has its own native token known as Spark (FLR), which was launched in December 2020.

In this guide, we'll take a look at what exactly the Flare Network and the Spark token are. We will then look at whether FLR is worth investing in or not.

Let's dive right in.

What Is The Flare Network?

The Flare network is a blockchain-based project that runs on the 'Flare Consensus Protocol' (FCP).

Essentially, this protocol will enable the network to run smart contract services on XRP using a virtual machine powered by Ethereum. The Ethereum virtual machine basically converts smart contracts into a byte code that computers can understand.

As a result, the Flare Network can run Turing complete smart contracts. In simple terms, Turing completeness is the property of a programming language where it can simulate any computer algorithm, as long as the computer has enough memory to run it.

This would mean that you could then use the XRP token for other types of utilities, such as executing smart contracts and decentralizing services.

One big benefit of this is that because it is compatible with Ethereum, you can use services that already exist on the ETH network but without having to switch over to ETH tokens.

Flare also works with another consensus protocol known as Avalanche. This protocol has been modified to be compatible with Federated Byzantine Agreement (FBA).

FBA is a unique type of consensus mechanism that is mostly used by cryptocurrency networks like Stellar and XRP Ledger.

In simple terms, the FBA is a consensus mechanism that works in a similar way to how voting works. In this case, each node gets to vote on which transactions they want or don't want to be included in the block, and then votes are tallied based on who has the most 'power'.

The reason why this is important is that if you're not familiar with a consensus mechanism like FBA, it would be difficult to understand how the Flare Network works.

What Is Spark (FLR) Token?

The Flare Network has its own native token known as Spark (SPARK). The SPARK token was launched in December 2020.

You can purchase SPARK by exchanging XRP for them with a 1:1 exchange rate. But since the total supply of SPARK is around 450,000 tokens, you have to trade an equal number of XRP in order to receive the maximum amount of SPARK. This means that if you wanted 20K FLR, you would need to trade 20K XRP.

This token was created through an airdrop campaign which is another term for 'freebies'. This type of campaign gives free tokens or coins to existing investors who will then, in turn, support the project.

In short, Flare Network distributes free tokens and only requires that you have ownership of some of the underlying assets to participate.

In a nutshell, Spark (FLR) can be used for:

  • Running the native XRP ledger
  • Paying transaction fees on dApps
  • Participating in protocol governance

What is the difference between XRP and Spark (FLR)?

As we mentioned above, SPARK acts as a utility token that's compatible with smart contracts on the Ethereum network. And since it is compatible with Ethereum, you can use services that already exist on the ETH network but without having to switch over to ETH tokens.

The XRP token, on the other hand, can be traded or exchanged for fiat currencies and other cryptocurrencies.

It also has a much higher supply of total tokens (100 billion) than SPARK, which currently has a total supply of 450,000 coins, according to Live Coin Watch.

How Does the Flare Network Work?

To put it simply, the Flare Network works by linking various types of distributed ledger technologies together via federated consensus.

The project is currently being developed with support from Ripple Labs and Coil. The latter has an 'xRapid' software solution that allows financial institutions to use XRP to speed up transfers between countries.

Unlike other consensus algorithms like Proof-of-Stake, Flare's consensus algorithm can function to maintain the security of the network without relying on what is commonly known as economic mechanisms.

What does this mean?

Let's explain this with an example you are familiar with. The Ethereum network is currently in the process of switching to the Proof-of-Stake (PoS) protocol in its Ethereum 2.0 upgrade.

Once the transition is complete, the security of the Ethereum network will rely on validators who stake the ETH token. In other words, Ethereum's network security will now be dependant on the ETH token and the amount that is staked by validators.

This creates a problem whereby validators who can prove ownership of higher stakes in the ETH token are given more incentive to mine blocks.

On its own, this would not be an issue because you will have a consensus as to which transactions should be included in the next block. The problem arises when bad actors get involved, and they cause problems like double-spending the same amount of tokens.

The Flare Network's consensus mechanism does not rely on economic incentives because it is designed to function under 'ideal' conditions, which means that you remove all security risks like bad actors and other issues.

This means that the token can be used in other ways and not just for security purposes. As a result, it will be more versatile without necessarily compromising the security of the network.

Spark (FLR) Price History 

According to historical price data from Live Coin Watch, FLR started trading in late January 2021. 

This means that FLR is fairly new in the market. In fact, it is not being actively traded in any exchange as of now. There is very little historical data to go by, and we might not have a lot to show you in this section. 

Having said that, we can see that Spark token started from a humble beginning to reach its current value of $1.15 per token. 

On January 28th, the coin was trading at around $0.232 with a 24-hour trading volume of $66,881. As of now, that is the first known price of FLR, according to Live Coin Watch. 

The first few months were pretty dormant and the coin kept low for the most part of January and February. At the start of February 2021, the price of Spark fell to $0.173, although the trading volume had more than doubled to cross $272,000. 

From there, FLR started rising rapidly, and by mid-February, it was trading for more than $0.300 per token. It then quickly jumped to over $0.500 in late February and bounced between $0.500 and $0.700 until early March. 

Around mid-March, FLR had one of its first big price jumps. Between March 11th and 16th, 2021, the price jumped from $0.613 to $1.663, representing a more than 170% gain in less than a week. 

Although the price had dropped to $0.905 on March 23rd, it quickly rose and hit its current all-time high of $2.445 on April 23rd, 2021. This was after a series of fluctuations below the $2 level. 

For instance, between 7th and 13th April, Spark rose from $1.039 to $1.912. That is an 84% increase in just a week. However, after achieving its current ATH, Spark lost more than 39% of its value to trade at $1.86 on April 23rd. 

Fortunately, the price bounced back just as quickly, and by May 1st, it was trading at $2.223 per token. This was followed by another gradual pullback that saw Spark trading at $1.798 by mid-May. And just when investors thought that the price would rebound again, it slumped even further to $1.027 on May 24th. 

A tense uptrend followed, and by mid-June, FLR had gone up to $1.754. Although the token fought hard to keep above this level, the growth momentum slowly reversed, and it started dropping again. 

By early August, the price of Spark had dipped below $1 to $0.672. It subsequently rose to $1.529 in mid-August then gradually declined to the current price of $1.15. 

Spark (FLR) Price Prediction in 2021

The Flare Network is still a project that is being developed and not even that active on the market yet. This means that the price of Spark (FLR) will depend on how many people want to use it in the next few years. There is no direct way of knowing this at the moment. 

So what can we say about its long-term potential?

This is difficult to predict at the moment. However, it will depend on how much demand there is for its technology and also whether other communities adopt it in a rapid fashion or not.

It is evident that integrating with Ripple Labs' technology and using XRP as the main source of liquidity are huge advantages for this project and could help it get adopted by a large number of people.

All that to say, it is too early to tell whether Spark (FLR) will go up in value or not, but its potential is tremendous and should not be underestimated. 

Although FLR is a long way down from its all-time high price, it seems to be preparing for another uptrend that might take it to or close to $2 by the end of the year. 

At the time of writing, FLR had gained 329% in 24-hours, according to price tracker Nomics.com. 

This is a good sign, and we could see a much higher price by the end of this year and the next years. 

If the token encounters the right catalysts or bull markets, it could potentially go to $5 in 2022 or even more. However, given that there is very little known about it now, we can’t say for sure how the price will play out in the future. 

We probably won’t advise jumping into FLR just yet. There’s a lot we don’t know about it, and the current growth seems unstable. 

Otherwise, if you want to invest or plan to invest in it in the future, we’ll show you some of the ways you can do that below.

How to Invest in Spark (FLR)

There are three common ways that you can invest in the Spark (FLR) token. They

include:

  • Holding for the long term
  • Trading for the short term
  • Investing in Flare's underlying technology

Method 1: HODLing Spark (FLR) Tokens

HODLing is a term that's commonly used in the cryptocurrency scene to mean 'holding' or 'long-term holding'. This means that you are going to hold onto the token and only sell when the price is way higher than your entry or purchase price.

The advantage of HODLing is that you don't have to spend time buying and selling the token. You simply hold onto it until the price rises so you can make profits when you decide to sell.

The disadvantage, however, is that this method doesn't allow you to continue earning a dividend from the tokens since Flare doesn't use the PoS mechanism.

In order to HODL, you will need to transfer your Spark tokens to a compatible wallet. Basically, there are three types of wallets you can use:

  • Cold wallets - this involves keeping the token in a hardware wallet like Trezor
  • Desktop wallet - you can download the open-source desktop wallet on your Mac or PC
  • Mobile/Web Wallet - this allows you to access the wallet using any device with an internet connection. You will log in using a mnemonic phrase, and you will not be required to download any software.

Hardware wallets are the most secure since they are offline-based. However, they are not as convenient as mobile or web wallets, which you can access from anywhere.

Since FLR is fairly new, you might not find a lot of wallets that support it. Fortunately for you, there are a number of wallets listed on the Flare website (https://flare.xyz/wallets/) which you can use.

These include:

  • Ledger
  • Exodus
  • Cobo
  • Ballet
  • Tangem
  • Guarda
  • CoolWallet S
  • Xumm

Method 2: Trading with Spark (FLR) Tokens

The second method is to buy and sell Spark tokens on exchanges like Binance, eToro, etc. By monitoring price movements in real-time, you can make a profit from buying at a low and selling at a high.

Trading usually involves more risks than HODLing, but on the other hand, it often pays off more as you will get instant gains and don't have to wait for a long time before making profits.

The advantage of trading is that most cryptocurrency traders will have an easy time finding and entering the market when prices are low and exiting when they are high.

The downside to trading is that you can buy at inflated prices and then wait for a period of time before selling, only to realize that your profits were higher if you had just HODLd the token.

There are several ways that you can trade FLR to make a profit. These include:

  • Spot trading is where you buy and sell the token immediately (i.e. within 30 seconds).
  • Using an arbitrage strategy where you take advantage of price differences by buying tokens in one place, then transferring them to another to sell at a higher price.
  • Trading with leverage means that you are using borrowed funds to trade the currency in the hope of buying low and selling high. However, we don't recommend this method since you can incur heavy losses from irresponsible use of leverage.

If you want to start trading Spark, we recommend doing so on eToro. eToro is the best trading platform that you can find out there. It is easy to use, has low fees and you are exposed to a wide array of trading tools.

To trade FLR on eToro:

  1. Open an online eToro account and verify your information. 
  2. Deposit funds into your eToro account. This should be a minimum of $200.
  3. Navigate to Top Markets on the navigation bar, click on Cryptocurrencies from the dropdown menu, then look for Spark (FLR). You can also simply search for it.
  4. Once you find the Spark token, click on the Trade option
  5. Enter the amount you wish to use to buy FLR.
  6. Set required parameters such as stop and leverage 
  7. Click on Open Trade

Method 3: Investing in the Technology

Flare's technology is visionary. It aims to boost XRP's utility by adding smart contract support.

Not only will this increase XRP's utility, but it will also lead to an appreciation in the token's value because of all the increased demand for it.

So, if you believe that XRP and smart contract support is going to make Flare and its token more valuable, then this is might be a good way to invest.

The disadvantage of investing in Flare's technology is that you need a high degree of technical knowledge because you will be required to read through their white paper, understand what it means and even go through their codebase.

However, unlike trading or HODLing, you won't rely on the performance of the token when investing in the technology, and as such, you won't be affected by price swings.

Is Spark (FLR) A Good Investment?

Yes, Spark (FLR) definitely has a lot of potentials. It is gaining more and more attention from the community as its technology continues to develop.

The token will also continue to increase in value as it becomes an integral part of the XRP ecosystem.

The token's development team is dedicated and resourceful. They are constantly working on releasing new tools and features to make it more accessible in terms of efficiency and security.

As such, Spark might be a good investment, especially in the future. For now, we don’t know much about it, so you will probably want to hold your horses until there is enough information to go by. 

Having said that, FLR's profitability will depend on the investment strategy or method that you are using.

For instance, if you are HODLing, then you will need to have a lot of patience because the token's value cannot be predicted. However, if you are trading or investing in its technology, then you can expect quick returns as there's always an opportunity to make gains in the crypto market.

All in all, keep in mind that we can't say with certainty whether any cryptocurrency is a good investment or not, so it is best to carry out due diligence before investing.

Read Also: 9 Cryptocurrencies That Could Make You A Millionaire

Conclusion: So, Should I Buy Spark (FLR) Tokens?

Flare (FLR) is a promising token because of its potential to make XRP even more useful in the future. The Spark token price will could appreciate in value as more people start using them for smart contract creation and other services that it offers.

However, this may not happen overnight. Ripple would first have to fix some of the issues that are currently plaguing the blockchain before developers can release their smart contracts.

The price of FLR might go down in the short term, but this could be a good opportunity to purchase it because prices tend to increase during bull markets.

Investing in Flare (FLR) may not be suitable for those who are looking to make quick gains because its value is currently unpredictable.

Having said that, if you are willing to invest in a project that is based on the future of XRP and smart contracts, then purchasing Spark tokens is definitely a good idea.

However, it is important to follow the project news as you will be able to stay updated on its development and know how it could affect the price of FLR.

Also, don't forget to do your own research to understand the project, as this will help you know whether it is a good idea in the first place.

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