Editing XRP (section)

== Risks ==
As with any investment, investing in XRP carries a level of risk. Overall, based on the XRP's adjusted beta (i.e. 1.87), the degree of risk associated with an investment in XRP is 'high'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'high' risk, it must have a beta value of 1.5 or more. Further information about the beta ratings can be found in the appendix section of this report.

The key risks can be found below. For us, currently, the biggest risk to the valuation of the investment relates to the strong competition from other blockchain platforms and traditional platforms (i.e. competition risk).
# '''Regulatory Risks:''' XRP has been under significant regulatory scrutiny, notably from the U.S. Securities and Exchange Commission (SEC), which filed a lawsuit against Ripple Labs, alleging that XRP is a security and was distributed without proper registration. The outcome of this legal battle can significantly impact XRP's value and legality.
# '''Market Volatility:''' Cryptocurrencies, in general, are known for their high volatility. The price of XRP can experience rapid and significant fluctuations, influenced by factors such as market sentiment, regulatory news, technological developments, and broader financial market trends.
# '''Adoption and Competition:''' The success of XRP is partly dependent on its adoption by financial institutions for cross-border transactions. This adoption is challenged by competition from other cryptocurrencies and traditional financial systems. Changes in the adoption rate or the emergence of more efficient technologies could impact XRP's value.
# '''Technological Risks:''' Like any technology-based asset, XRP faces risks associated with technological failures, such as security vulnerabilities, code errors, or issues with the underlying blockchain technology.
# '''Liquidity Risk:''' While XRP is among the more liquid cryptocurrencies, its market liquidity can still be affected by regulatory decisions or major market movements. In some cases, platforms have delisted or halted trading of XRP due to regulatory news, affecting liquidity.
# '''Dependence on Ripple Labs:''' Despite XRP being decentralized, its perception and, to some extent, its success are closely tied to Ripple Labs. Negative news about Ripple, changes in its strategy, or its financial health can impact XRP.
# '''Global Regulatory Environment:''' Cryptocurrency regulations vary by country and are continually evolving. New regulations or changes in existing regulations in key markets could affect XRP's usability and acceptance.
# '''Cybersecurity Risks:''' Being a digital asset, XRP is subject to cybersecurity risks, including hacking and fraudulent activities. Investors need to ensure they use secure methods to store and transact XRP.
# '''Economic and Political Factors:''' Global economic conditions, political stability, and changes in government policies towards cryptocurrencies can affect the crypto market, including XRP.
# '''Environmental Concerns:''' While XRP is more energy-efficient compared to some other cryptocurrencies, the broader environmental impact of digital currencies can influence investor sentiment and regulatory approaches.