Key Points
Ripple continues to build out a global payment and liquidity network powered by XRP.
Given the disruptive potential of this network, some analysts think XRP might have 100x upside.
XRP's future upside potential may be capped if legacy rivals innovate at the same pace as Ripple.
For years, crypto investors have touted XRP (CRYPTO: XRP) as a potential millionaire-maker. Despite a few brief flashes of brilliance, XRP has continually overpromised and underdelivered. It still trades for a paltry $1.
So is there still a chance that XRP has millionaire-maker upside? Let's take a closer look.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
Is XRP the future of payments?
For the past three years, Ripple, the company behind the XRP crypto token, has been building out a global blockchain-based payment network with XRP at the core. The company has spent nearly $3 billion on blockchain- and crypto-related acquisitions, all aimed at creating an end-to-end payment and liquidity solution for banks and financial institutions.
At the end of last year, Ripple raised $500 million from VC investors at a whopping $40 billion valuation. By way of comparison, the current market cap of Coinbase Global is $42 billion, and that of Strategy is $35 billion.
Image source: Getty Images.
So here's the best-case scenario: Ripple uses its new war chest to tie all the pieces together, heavily promotes XRP as the crypto token driving value within this network, and voilà! The price of XRP could explode. It's not uncommon to find price targets for XRP as high as $100.
Millionaire-maker math
And that's where things get interesting. If XRP ever skyrockets to $100, that's a potential 100x return on investment, given its current price of $1. From here, the millionaire-maker math becomes quite simple. You'd just need to invest $10,000 today, and you'd eventually end up with $1 million.
Sound outlandish? Perhaps. XRP would have a $5.8 trillion market cap at that point. But a similar scenario has played out with Bitcoin (CRYPTO: BTC).
At one time, Bitcoin traded for less than $1. Today, it trades for $66,000. Last October, it traded as high as $126,000. Bitcoin didn't just deliver 100x returns; it delivered 100,000x returns.
Caveats for XRP investors
It's OK to dream big. But keep in mind that XRP has been touted as a high-flying cryptocurrency for more than a decade, yet its all-time high is still just $3.84.
Two years ago, there was hope that the Ripple payment network might completely disrupt the legacy SWIFT payment network, which connects 11,500 financial institutions worldwide. Ripple was supposed to power the future of payments, and the XRP blockchain ledger was going to play a key role.
Last June, however, Ripple conceded that it might capture only 14% of the payment market controlled by SWIFT. Then, this summer, SWIFT announced it was creating a blockchain-based payment solution of its own, with no need for XRP. Some referred to this new project as a potential "XRP killer."
So be careful about investing in this altcoin. Disrupting huge legacy players can take much longer than originally thought. That being said, XRP still has a shot at going stratospheric if Ripple's ambitious global payments system gains traction.
Dominic Basulto has positions in Bitcoin and XRP. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.