One of the first things a migrant thinks of when they arrive in a more prosperous country is to take advantage of their economic progress to help loved ones left behind at home. However, sending monetary remittances has a cost that must invariably have repercussions on who sends the money, but cryptocurrencies can help alleviate this problem in part, offering transfer companies tools that lower costs substantially. Therefore, the Ripple cryptocurrency may not be as attractive as an investment, but for both money transfer companies and those who want to trade XRP through Forex brokers, it certainly has something to offer.
Few things are more hateful than the fact of putting together an amount of money for your relatives on the other side of the border and that when you go to send it, the commissions eat up a substantial chunk. Many times this is unavoidable, transfers are born of a need, around which a business has grown. And this is not bad, since the alternative would be not to be able to send the money at all, or to do it in a very insecure way, but despite the legitimate nature of these businesses, the new technologies should make the rates lower and keep the business going. Why is it so expensive to send money? When the recipient in Mexico receives the money sent from the US, he does so in fiat currency, a currency that the entity in charge of sending must have in liquid form, but financial entities are allergic to having cash. Liquid money does not generate profits, for practical purposes it is dead money, having it costs money, and, therefore, they prefer to request it from larger financial entities, entities that can afford to have cash reserves, paying large commissions. Commissions that will pass on to customers, just as any business passes on its costs to end users. These costs can be substantially reduced thanks to the tools available to the XRP cryptocurrency through RippleNet, as evidenced by the recent partnership between Ripple and Intermex. In fact, the payment solution offered by XRP seems to be in fashion lately, and the cryptocurrency is trading at values not seen for three months. The solution to obtain liquidity is called On Demand Liquidity or ODL (formerly xRapid), and it works as follows; the transfer companies that operate with RippleNet have some XRP reserves, when the dollars are entered in the US they are converted into XRP, which in a few seconds will be converted into the equivalent amount of Mexican pesos on the other side of the border, avoiding this way the onerous commissions that large entities charge for giving up their valuable reserves, and at the same time greatly speeding up the process.
XRP in trading
But if we are not a cross-border payment company and do not want to buy XRP coins for whatever reason, there are other possibilities, for example, trading XRP through trading contracts for difference, or CFDs. If we decide on this way of operating, we will use the price of XRP against the dollar to open bilateral contracts with a broker in which both parties agree to pay the other the difference between the price of the asset (XRP in this case) at open the position and the price of the same asset when closing it. If the trader is correct in his prediction, he deposits money, otherwise the corresponding amount will be subtracted from the deposit made in his account. When we trade with CFDs we use leverage, this means that we are enormously multiplying the amount of our operation through financing provided by the broker, or what is the same, with debt. It is up to the trader to provide a small deposit in proportion as a guarantee. Obviously, this gives us the possibility of multiplying profits in case of obtaining them, but it will also multiply losses, in case of incurring them, or it can even get us into debt if the broker does not offer protection against possible negative balances. So the most important thing will be to learn to manage ourselves in this trading with a lot of study and work, taking it seriously, if we do not want to lose everything at the first change. Whether because of the possibilities they offer to companies that provide us with everyday services or because we can use them to invest like any other asset, cryptocurrencies are proving to be much more than a curiosity for economists, or another way to diversify a stock portfolio.