XRP Just Became an Even Better Buy. Here's Why.

If you’re looking for a cryptocurrency investment that’s at a very low risk of going to zero anytime soon, look no further than XRP (XRP -5.59%), as its blockchain just got an important upgrade that will likely help the coin to climb to new heights over the coming years.

Today, it’s a better buy than before, and there’s likely more improvements to its technology on the way. Here’s what you need to know and how it improves the coin’s appeal as an investment.

This new capability will make the chain easier to use for everyone

Most of the time, when you make a transaction in the stock market, your purchase order is handled by an automated system. The point of that system, called an automated market maker (AMM), is to match buyers and sellers requesting roughly the same prices to each other. That way, both of them get the price they want to either buy or sell their shares. If there wasn’t an AMM working on your behalf (and if, for instance, buyers and sellers were simply matched in the order that they initiated the transaction), it would be a common experience to attempt buying a share of a stock at $1, and accidentally buy it at $2 simply because that was the price someone was selling it for.

This issue would be quite troublesome for individuals working with relatively small quantities of money. For banks, however, a spread of that size is unacceptable and would result in losing a vast amount of money repeatedly.

XRP’s new automated market maker, slated to launch on March 22, is a key upgrade that will make the chain far more efficient for its target audience of financial institutions making international transfers. The AMM’s ability to claw back transactions that have already settled is of particular importance. That means if there is an issue with regulatory compliance or fraud, it’s possible to revert a transaction. For conservative actors like banks, that’s a very important capability, as it de-risks every transaction they make on the chain significantly.

But the AMM will enhance the transaction efficiency of assets beyond XRP’s main coin. It’ll also be able to market make for real-world assets, including the U.S. Treasuries that are now available on the XRP blockchain ledger. For banks, which are accustomed to being able to transact with efficient and deep markets for those Treasuries, the AMM will be a key enabler for them to feel comfortable with bringing and tracking those assets on XRP’s chain. And that’s bullish, as trading Treasuries and other items generates fees that can fund future upgrades too.

This won’t be the last upgrade

This latest update is far from the only opportunity that XRP has in play right now that could increase its value significantly. In the near future, it’ll increase its programmable smart contract capabilities, as well as create ways for users to borrow from and lend to each other. Those improvements will make it an even more appealing place for banks and currency exchange houses to store their assets.

There are still some risks in the near term, of course. If the volume of international trade declines, the demand for XRP could decline too. A recession could also throw a wrench in the works for investors, especially if it broadly depresses asset prices. There’s also the longer-term risk that another fintech could develop an even more appealing system for scooting money across borders without incurring large delays or hefty fees.

Still, with the pace of the chain’s development slated to continue being fairly quick, the chance of being supplanted by a competitor is not very large. And if it continues to create the features that its target demographic craves, the competition issue will continue to take care of itself.

So, if you were thinking of buying XRP before, consider this another green light for making a small investment. Just remember to keep your expectations in check, as this coin’s steady march forward probably won’t result in it going to the moon anytime soon.