If you invested in XRP, the cryptocurrency backed by the Ripple foundation in 2017, chances are that you made a profit as the cryptocurrency market grew exponentially. And if you tried to ride the bullish momentum in 2019, the chances are that you were disappointed by XRP.

After the 2018 cryptocurrency bubble burst, the cryptocurrency market lost a significant proportion of the 2017 massive gains. 2018 was, therefore, a bad year for the cryptocurrency market. However, things took a turn for the better in 2018. Major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) started to recover, and prices started going up high. But this was not the case for XRP.

Different fundamentals

The reason behind XRP's failure to perform in line with the rest of the market is because it operates under its unique fundamentals. Ripple's price peaked at $2.7 at the start of 2018 before losing most of its value shortly afterward. It has been ranging at sub-$0.5 prices since October last year, even as the rest of the cryptocurrencies gain value.

Ripple’s performance seems to have stabilized and is no longer affected by speculation. The price movements of Bitcoin and most of the altcoins in the cryptocurrency market are heavily influenced by speculation. For example, Bitcoin tends to gain value when there is an influx of buyers, a situation that encourages more buyers to jump on board, thus driving up its value.

XRP has a main use which is to help the financial services sector to achieve faster transactions. In short, it is a digital token that is used to facilitate instant payments. This s also the reason why XRP needs to have a stable price. Bitcoin, which was initially designed as a cryptocurrency for online transactions, is hardly usable for that purpose because its value changes so quickly. This makes it unattractive for transactions but attractive as a speculative investment avenue.

The risks involved investing speculatively, especially in the cryptocurrency market.

Traders try to make sense of the market through historical data and technical analysis tools. This is usually the case in the forex market, but the cryptocurrency market is a whole different beast that does not subscribe to the forces that drive the forex market. Speculation is the main driving force for the cryptocurrency market, and this means that technical analysis tools are not effective for digital currencies.

Over the past few years, many people have jumped on to the cryptocurrency investment bandwagon. Most of them have gotten burned but granted, some that entered the market at the right time did manage to make significant gains with relative ease. People buy into digital currencies speculatively, so that they can profit when the value of the cryptocurrencies goes up. This speculative approach comes with its risks.

One of the biggest risks is that the value of the currencies may quickly shift to any direction, in which case one can either earn some profit or their investment may erode. The fact that one cannot predict the possible direction makes it dangerous to invest speculatively in cryptocurrencies.

Why investing in fundamentals might be the best way to invest in cryptocurrencies

Just because investing speculatively is dangerous does not mean that one should not invest in cryptocurrencies. Perhaps one of the best ways to invest in digital currencies is to invest in the fundamentals of the underlying cryptocurrency. In that case, identifying the growth strategy of the organization behind a cryptocurrency or digital token might be a better approach.

For example, the value of XRP depends on the efficiently Ripple the company or organization behind the XRP token. This means that more adoption of Ripple services such as xRapid might actually boost the value of the digital currency. One can, therefore, take advantage of such gains, but this also means that one would have to make a huge investment to enjoy the benefits of the small gains.

This approach also applies to other cryptocurrencies, especially those that have a special use case. The value of the underlying cryptocurrency will be affected by developments involving the particular used case.

XRP’s decoupling from Bitcoin

For the longest time, the price performance of altcoins has mainly been pegged on Bitcoin’s performance. This is perhaps because Bitcoin was the first cryptocurrency to be launched and it also boasts of the largest market cap out of all the coins in the market. This is why the price movements of the altcoins tend to mimic Bitcoin’s price movements. So in a way, the prices of altcoins have been dependent on Bitcoin’s performance for the past few years.

Cryptocurrency decoupling is the idea that an altcoin can exist without its price being influenced by Bitcoin’s price movements. This means that cryptocurrencies would exist independently as it was initially intended. Market experts believe that stable coins will help achieve crypto decoupling in the future since their performance is independent of Bitcoin’s performance.

XRP is also a great example of how decoupling in the cryptocurrency market can be achieved. For example, XRP’s performance in 2018, especially towards mid-year, indicates that XRP was bearish even as Bitcoin recovered some of the gains lost when the crypto bubble burst. XRP's decoupling from Bitcoin, therefore, sheds some light into how the cryptocurrency market might achieve this at a larger scale.

XRP’s advantage is that it has a special use case that makes it less of a speculative tool and more of a utility token. This strategy might become widespread, especially with the launch of more projects that tackle the inflation problem.

Market experts also expect XRP to become fully decoupled from Bitcoin shortly, especially now that Ripple solutions are rapidly becoming attractive in the fintech industry. Speculative traders have already started to understand more about XRP and Ripple operations, and this has contributed to fewer speculative investments on XRP. The result is that its performance no longer echoes Bitcoin’s performanc
e.

What is Blue Ocean Strategy?

A brainchild of W. Chan Kim and Renee Mauborgne, the Blue Ocean Strategy is shaping various industries by making it easy for businesses and companies to shrug off competition. Of all the strategic planning models in existence, Blue Ocean strategy continues to stand out. Right from the auto industry via Tesla to the burgeoning cryptocurrency sector with Ripple (XRP), the strategy is finding great use, allowing companies to carve market share in niche markets.

Simply put, Blue Ocean Strategy is a play that calls for differentiation in highly crowded marketplaces, with the aim of creating new demand. The idea, in this case, is to focus resources and attention on creating and capturing untapped market space. By tapping untapped market space businesses are in return, able to make competition irrelevant.

With blue ocean strategy, companies are encouraged to search uncontested market space, thus avoid competing for market share in crowded market spaces. The uncontested market spaces, in this case, are referred to as Blue Oceans. In contrast, crowded market space are many at times referred to as ‘Red Oceans’ given the high number of players that lead to vicious competition.

Therefore, Blue Ocean strategy many at a times leads to high product differentiation that is still able to elicit strong demand in the market. The aspect of low cost in the untapped market space comes as the result of minimal or zero competition.

Perfect applications of Blue Ocean Strategy

Ripple XRP cryptocurrency, as well as Tesla, are the two high profile brands that have leveraged the Blue Ocean strategy to perfection with great success.

XRP Blue Ocean Strategy

Ripple is a popular cryptocurrency that also operates as a blockchain network in the multibillion cryptocurrency sector. While operating in a highly crowded field, dominated by the likes of Bitcoin and Ethereum, Ripple has successfully carved a market niche in the form of untapped market space, thereby setting itself apart from the competition.

Instead of competing against Bitcoin, Ethereum and other cryptocurrencies, Ripple has focused its attention on cross border payments, a field that for the longest has been dominated by SWIFT. The inefficiencies of SWIFT, especially in the number of days it takes to process s payments as well as costs involved, has presented an opportunity that Ripple Ledger is making good use of.

Ripple has set itself apart by trying to disrupt the banking industry more so focusing on cross border payments. For the longest time, people have had to contend with a lot of challenges key among them being the amount of time it takes to process cross border payments as well as interbank transfers. The cost has also been a challenge in addition to security concerns.

Ripple sensing a window of opportunity in the untapped market space is already leveraging its blockchain ledger to solve a good chunk of the issues with ease. While International payments can take days at very high costs, the Ripple Ledger is changing all this.

A number of banks have already joined the Ripple Ledger to make it possible for customers to enjoy instant international payments. The fact that some of the biggest mainstream financial institutions are already using the Ripple Ledger underscores the Ripple Ledger credibility.

While other cryptocurrencies are focusing on how to displace mainstream institutions and overthrow banks and governments, Ripple is working with them. The integration has allowed it to enjoy increased adoption in the mainstream sector that for the longest time has shunned cryptocurrencies.

Thanks to the Blue ocean strategy, Ripple has inked strategic partnerships with some of the biggest global players such as the Saudi Arabian Monetary Authority as well as Santander as well as LianLian Pay.

Tesla Blue Ocean Strategy

Instead of venturing into the auto industry and becoming just another car making company, Elon Musk set out to differentiate Tesla in the crowded auto industry. It is only now that electric vehicle cars have become a common phenomenon. As Tesla was starting out, very few people thought the startup company would be able to survive the highly competitive industry let alone compete against General Motors, Toyota or even Ford.

The electric vehicle spectacle presented an opportunity for Tesla to enter into an untapped market space that posed tremendous potential. The investments are already paying off as Tesla has carved for itself a substantial amount of market share after operating in the industry under zero or minimum competition.

When Tesla was starting out, other automakers were mostly focused on coming up with the next big thing in terms of fuel efficiency. Very few had plans to embark on developing electric vehicles. The stagnation provided a window of opportunity for Tesla to operate under zero competition, thereby cementing its reputation in a niche market within the auto industry.

While other companies have since ventured into the auto industry, Tesla remains the undisputed king of electric cars thanks to its first-mover advantage. The company is currently the biggest developer and seller of electric cars. The company has also carved a niche for itself on the high-end of the market with the development of premium EV cars.

There are many examples of companies that have sought to differentiate themselves in a highly crowded market place by leveraging the Blue ocean strategy. Amazon is a perfect example having revolutionized the retail industry by focusing on niche e-commerce.

Blue Ocean Strategy Bottom Line

Gaining a competitive edge in uncontested market space is the only way businesses will be able to survive an onslaught of competition going forward. The pursuit of high product differentiation in a crowded marketplace should be the entrepreneur’s center of attention to achieve high levels of success going forward.

The idea with Blue Ocean strategy is not to beat competition. Instead, it is to try and make competition irrelevant. For instance, Ripple is not competing against SWIFT on cross border payments. Instead, it is trying to make it irrelevant by providing people with a better way of sending money faster and at lower costs. Tesla, on the other hand, is not trying to compete against other automakers on car sales. Instead, it is providing customers with an alternative to fuel cars that pollute the environment.

The premine concept

The term pre-mining coins come from premine is one of the many concepts in the cryptocurrency sector. Its a situation where a developer issues a specific cryptocurrency amount before it is made public. One reason for doing this is to pay for various aspects such as hosting of cryptocurrency or payment for core block explorers.

A premining coin is, therefore, is any cryptocurrency used to pay for its development processes; either to developers employed or to for the coin's listing. Cryptocurrencies issued from the genesis block before an ICO pre-sale are also considered as pre-mining coins.

What makes it such an interesting approach is that it can be equated to a situation where someone creates their own money, and that money is used to pay for the process of developing its infrastructure. Therefore, there can be no shortage of revenue to fund the development.

Ripple XRP as premined token

XRP is one of the cryptocurrencies that have taken advantage of the premine idea. Ripple has been one of the most active blockchain projects, particularly because its parent company Ripple Labs has been positioning itself as a currency exchange and remittance service. It even features an RTGS protocol that functions as a distributed ledger across a network of nodes. It has even become a rival to the SWIFT remittance service.

Ripple used XRP in the development process of the network that it uses for the remittance service. The network consists of validating nodes without a Proof-of-Work system. Also, 100 XRP tokens were created when the Ripple network was initially launched. Ripple Labs, the company that is tasked with the development activities on the network retained 60 billion XRP while 38 billion was put in circulation. The rest was distributed to the founders.

Ripple’s incentive program

Ripple has an incentive program whose sole purpose is to encourage more adoption of XRP while attracting more partners onboard. The company launched the RippleNet accelerator program so provide financial incentives to companies or organizations that promote the XRP payment network. Ripple Labs funded the accelerator program through its XRP worth $300 million that it took from its own XRP stash. The program features an adoption marketing incentive and a volume rebate. Ripple could also take advantage of incentive programs to achieve growth by leveraging incentive strategies such as those used by PayPal and Groupon.

PayPal managed to achieve 100 million users through a referral and incentive program that helped it to achieve between 7% and 10% growth daily. Groupon also managed to achieve significant growth through its referral program. Ripple is still in its early stages of development, and so it has an opportunity to leverage referrals and incentives to achieve the desired growth.

Decentralization

The debate on whether Ripple is decentralized is one that has sparked a lot of views. For example, some argue that it is Ripple Labs control more than 50% of XRP. Another argument is that Ripple is not centralized because XRP would continue to function if Ripple was to disappear. In a way, both are right based on the perspective, especially because there is ambiguity in the meaning of “decentralization” as far as cryptocurrencies are concerned. However, it is this ambiguity that makes Ripple work for its intended purpose of remittance.

The supply of Ripple in the market

A look at the XRP charts reveals that the digital coin has grown very little over the past few years reveals that it may not have shot up in value as many investors would have expected. This is especially compared to Bitcoin (BTC) whose value has grown by a huge margin since it was introduced. In fact, XRP’s performance is rather subdued compared to that of Bitcoin (BTC).

Unlike Bitcoin, XRP is not designed as a store of value, and so its price is a bit more stable. The price of Bitcoin has been known to be quite volatile because many people invest in it so that they can take advantage of its growth.

It is in the interest of the Ripple organization to maintain XRP’s low volatility and stable value. This is because more volatility would make it less appealing as a cryptocurrency that facilitates money remittance, which is the target market. This is also the same reason why Ripple developers made sure that they released only a fraction of the XRP coins in the market so that they can control the inflationary levels.

As far as the XRP supply is concerned, the developers released a fixed amount into the market, but that number is expected to dwindle with the increase in demand. Higher demand for XRP will likely come about as the result of more use of Ripple’s platform to facilitate transactions and also with the growing popularity of the currency should encourage more people to acquire it.

Token burning and XRP’s deflationary nature

As noted, Ripple developers made XRP and its platform to facilitate and improve remittance services, and so they have put in place measures aimed at making sure that XRP is deflationary rather than inflationary. This evident Ripple’s price performance, which does not seem to behave like other currencies, especially when Bitcoin is experiencing volatility.

One of the tools that Ripple uses for price control is coin burn. The latter refers to the removal of some coins from the market or from circulation. The XRP burn can be viewed as a transaction cost whose purpose is to prevent transactions from being disrupted by denial-of-service attacks and spam. The burn rate makes sure that a small fraction of XRP is destroyed in each transaction.

The burn rate or transaction cost is designed to increase as the transaction volume on the network increases over time. This means that rather than being pegged on the supply and demand for products, the currency’s value is based on utility in the form of facilitating transactions.

The stable nature of XRP not only makes it deal for cross-border remittance, but it also makes it an attractive currency for online transactions. Ripple is banking on this to boost the adoption of the cryptocurrency by individuals and not just corporates. Other currencies such as Bitcoin are not as attractive for online transactions due to their highly volatile nature.