How risky is Ripple’s XRP? The dangers of buying the cryptocurrency explained
RIPPLE's XRP cryptocurrency has slumped over the last week, highlighting the risks of investing in the volatile digital coin market.
Like any investment, there are risks involved in backing cryptocurrencies - here's what you need to know about buying XRP.
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Many people are tempted to buy cryptocurrencies by the promise of large returns, but there also very large risks.
The rise of trading apps have also made it easier than ever to buy cryptocurrnecies, stocks and shares at the touch of the button.
Buying cryptocurrency is a seriously risky businesses and you must be prepared to lose ALL of your cash if things go wrong.
They're highly volatile meaning your cash can go down as well as up in no time at all.
Just because it's going up now does not mean it will continue rising after you invest.
Before parting with your cash, make sure you've carried out thorough research and are confident that you can afford to lose all of your investment.
What is XRP?
XRP is a cryptocurrency that was created in 2012 by the company Ripple.
Like other cryptocurrencies, XRP is digital and has no physical notes or coins like you get with traditional currencies such as the pound or dollar.
XRP is one of hundreds of cryptocurrencies out there.
Bitcoin is the most well known and has been rebounding recently after El Salvador became the first country to accept it as legal tender, while Dogecoin has dropped.
Most cryptocurrencies have taken a hit over the past week, including XRP.
The cryptocurrency markets have been slumping since China announced a crackdown last month and Elon Musk said Tesla will not accept crypto payments.
What are the risks of buying Ripple's XRP?
Brits have been warned that they risk losing ALL of their money if they invest in bitcoin and other cryptocurrencies.
The UK's money regulator the Financial Conduct Authority issued the warning at the start of the year.
It said that among the risks are the price going up and down by a lot and very suddenly - known as price volatility.
A risk of investing in crypto with even these legitimate platforms is that they can restrict trading,
Robinhood is not yet in the UK but there are a number of other similar apps and platforms where you can buy a range of cryptocurrencies.
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Tom Stelzer, investing expert at personal finance comparison site said: "The danger of buying cryptocurrencies on platforms like Robinhood is that you don’t actually own the underlying asset.
"This means that if you want to move your coins, you won’t be able to do so, and if Robinhood decides to restrict trading at any point, you may find you’re unable to sell when you want."