Die-hard Ripple fanatics are going “balls deep” in debt to buy XRP, the cryptocurrency associated with Ripple. One Twitter user known as XRP PHOENIX said ...
Die-hard Ripple fanatics are going “balls deep” in debt to buy XRP, the cryptocurrency associated with Ripple. One Twitter user known as XRP PHOENIX said he’d taken a loan for “way more than [he] can afford to pay back” to fund his crypto purchases.
Asked why he would make such a risky financial decision, he admitted it was all about greed.
“Honestly, greed is possibly the biggest prevailing reason. However, being from a family that nobody makes over 20k a year/didn’t graduate from high school, I’m just done accepting mediocrity from life. I’m risking it for the biscuit my friend.”
The thread, brought to light by The Block’s Larry Cemark, revealed others who had taken out similar risky loans.
Another Twitter user reportedly took out a loan against his retirement fund to purchase XRP:
Another said he bought XRP using a AUD $150,000 loan.
“I personally drummed up about 150K AUD in debt buying XRP. It seems like a lot but for a chance of changing my life on a solid investment. I would say what I did was the right thing for me.”
The prevailing reason behind these rash financial decisions is pure monetary gain. As another Ripple devotee explains:
“I too spent more than I can afford on XRP but only because it’s a once in a lifetime opportunity to get rich.”
Apart from Stellar (XLM), XRP is the worst-performing digital asset in the top ten. It’s down 14 percent while bitcoin is up 150 percent. Making the “balls deep” investment even more dangerous.
There are many reasons why XRP has fallen behind its peers. Despite numerous promises by Ripple CEO Brad Garlinghouse, XRP has yet to be adopted as liquidity tool by major banks. Ripple’s many partnerships have not converted into XRP utility or demand.
Then there’s the threat posed by Facebook’s Libra and banks like JP Morgan developing their own cryptocurrencies. Libra, which aims to facilitate cross border payments and remittances, arguably weakens XRP’s use case. And by creating their own cryptocurrencies, banks could sidestep XRP completely.
And third, there’s simple supply and demand economics as Ripple continues to dump XRP on investors and the open market from its escrow supply.
This isn’t the first case of people taking out enormous loans to fund cryptocurrency purchases. Back at the peak of the 2017 cryptocurrency bubble, the stories were rampant. One 32-year-old in Abu Dhabi took out a six-figure loan to buy bitcoin and various altcoins. Soon after, the market tumbled.
He’s now paying back $3,067 a month until December 2021 after many of his investments declined 95 percent.
Needless to say, taking out a loan to buy risky assets is never a good idea.