Is Ripple (XRP) Safe?

Last Updated October 6th 2021

8 Min Read

As is the case with any other investment, Ripple is not free of risk. But the debate on whether Ripple really is a safe investment has gained global attention due to the frequency and scale of attacks launched against the digital payment cryptocurrency.

In less than a decade, Ripple has morphed into one of the largest cryptocurrency projects. During this time, however, it also attracted the attention of criminals and exposed its investors to a barrage of investment risks. But seeing that these challenges haven’t inhibited its growth, investors now want to know if Ripple is a safe investment?

Well, in the last few years, cryptocurrency-related crimes have increased sharply, and a significant portion of these have been directed towards the Ripple network and Ripple investors. But this wasn't the only challenge that XRP investors have been forced to endure. The digital asset and its founders have also been embroiled in a legal battle with the SEC, which has not only destabilized its prices but also threatens its sustainability.

Despite these challenges, however, Ripple’s popularity and market cap have been on a steady rise. The trader sentiments are also at their all-time high, which reinforces most crypto expert views that Ripple is still a great investment. But looking at all the challenges facing XRP’s price and sustainability, can Ripple be said to be a safe investment moving forward?

We explore all these, inform you of all the major threats facing Ripple now and in the immediate future, tell you how to keep your Ripple investments safe and introduce you to some of the factors that you need to consider before buying ripple coins.

Read on.

What To Consider When Buying Ripple (XRP)?

For starters, you need to understand that the cash you invest in Ripple is not immune to XRP price volatility or hackers.

Like all other cryptocurrencies, Ripple has had a rather volatile price action that saw its prices rise steadily and fall equally first. In December 2017, for instance, XRP’s price shot from around $0.25 on 1st December to hit an all-time high of $3.8 on 4th Jan 2018. 30 days later, however, the coin had shed more than 80% of this value and was trading below $0.6.

The most recent volatile Ripple price fluctuation came about during the last price rally when it more than quadrupled its value between March and April 2021. By the end of May, however, Ripple had lost more than 60% of April’s peak prices.

You also need to know that Ripple is currently embroiled in a legal battle with the SEC. In the case, SEC instituted a case against Ripple Labs, Inc. and two of its executives, accusing them of collecting $1.3 Billion from US citizens through the sale of unregistered securities. The case that also seeks to have the XRP coin categorized as security and not a digital asset like Bitcoin or Ethereum has had a significant influence on Ripple’s performance.

Today, crypto experts are sharply divided on Ripple’s future. There generally is a lot of uncertainty on the impact the case determination will have on the future of Ripple and crypto investments. You would, therefore, want to go slow on your XRP investments, especially if you are a long-term investor.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

What Are The Risks Associated With Ripple (XRP)?

There are numerous risks associated with any digital currency investment, but the three that present an immediate threat to Ripple investing today include hacking, untamed volatility, and the SERC lawsuit.

The Federal Trade Commission recently reported that cryptocurrency-related crimes, especially hacking of investor wallets and exchanges, have been on a steady increase in the last 5 years. Given Ripple’s popularity and fungibility, it does not come as a surprise that a significant number of these crimes targeted XRP investors.

In this case, there are a few things you can do to keep your Ripple investments secure. For starters, you should consider taking advantage of all the security features offered by your crypto exchange or wallet. These include activating multi-factor authentication and taking advantage of the insured custodial services offered by such trading platforms as Coinbase and Binance.

Ripple’s volatile price action is harder to guard your portfolio against. Like Bitcoin, nevertheless, Ripple has proven that it will always rebound and push its prices above the last high. Interestingly though, the coin was not been able to get back to the early 2018 highs during the early 2021 price rally - a factor that most experts attribute to the ongoing legal battle.

The biggest threat to Ripple’s price and sustainability yet has been presented by the ongoing legal battle between Ripple Labs and the SEC. Should the financial regulator succeed in having the XRP coin declared to be a security, it would lose its digital asset status and be treated like conventional stocks. It would also be delisted from most crypto exchanges, as they do not support conventional trade instruments.

To protect yourself from the impact that such an outcome would have on your Ripple investment, experts advise that you cut down on your XRP holdings. If you must invest in the asset, consider short-term trading until the case is heard and determined.

Other Types of Ripple (XRP) Scams to Look out for

Phishing

In phishing scams, hackers often send their victims unsolicited emails and messages with malicious links. These may direct you to fake crypto exchange or crypto wallet websites and trick you into entering your log-in details or simply inject such malware as key-loggers into your computer/phone device to steal your log-in details to an exchange or wallet. The bottom line with all these scams is that they are designed to steal sensitive information that can then be used to illegally access and acquire your Ripple assets.

You can evade this when you stop clicking on links to unsolicited emails and any other message. Whitelist emails from exchanges and crypto wallets and only use the links provided therein to access your trading or wallet accounts.

Ponzi/Pyramid schemes

In Ponzi scams, the creators launch investment programs and ask you to invest your XRP coins in return for insane growth rates. They will often ask that you lock in the funds for a limited period. Most will often reward the first and possibly the second batch of investors with these insane returns on investments. But this is only a trick meant to have them commit more digital assets and draw in more victims. As soon as they are called out on the scam or hit their target, they take down the website/program, disable all communications, and run with the investor assets.

To protect your Ripple investment from a Ponzi scheme, avoid investment platforms that promise over-the-market rate returns.

How To Keep Your Ripple (XRP) Safe

Just as hackers and other criminals have devised numerous ways of compromising the security of your investment, the crypto industry players have come with multiple sure-fire ways of keeping your Ripple coins safe.

First, crypto exchanges and crypto wallets have implemented multiple security measures around their platforms. Virtually all wallets and exchanges have two or multiple authentication features for log-ins and crypto transfer. Take advantage of all these features as they go a long way in deterring hacking.

Secondly, invest in reputable hardware wallets. These can store your Ripple private keys offline and out of reach of hackers. If the hardware wallet supports multi-factor authentication and allows for offline transaction processing, the better.

Thirdly, the 2020 Verizon Data Breaches Investigation report concluded that 81% of all online hacks were made possible by weak passwords. You can avoid this by using strong and unique passwords for your crypto exchange and wallet accounts. Equally important, remember to keep the seed phrase for your hardware wallet safe but accessible.

Ripple (XRP) Security Vs Privacy

As crypto crimes rose, individuals have used the terms security and privacy interchangeably when reporting about crypto-related compromises. But the two couldn’t be more different.

While Ripple security relates to keeping XRP assets safe from hackers, criminal elements, and even unexpected losses due to loss of wallet seed phrase or virus. There are practical steps that an investor could make in keeping his/her Ripple coins safe, including investing in a hardware wallet and embracing multi-factor authentication for logins to exchanges/wallet and crypto transfers.

Privacy, on the other hand, relates to the level of anonymity accorded the investor by the Ripple network. Like Bitcoin, Ripple wasn’t designed with absolute anonymity in mind and is, therefore, considered pseudonymous. This implies that you cannot pick the identity details of parties to a ripple transaction just by looking at the transaction thread on the network. With basic cryptography knowledge and access to the Ripple ledger, however, you can easily trace an XRP transaction back to an individual investor.