Like its cryptocurrency peers, XRP (XRP -2.41%) has taken its investors on a roller coaster ride over the years. It has had short-lived price surges in the past, but it currently trades 85% off its peak.

Should investors buy XRP right now on the dip with $1,000 and hold through 2024 and beyond? Let’s look at the bull and bear cases with this innovative crypto before coming to a conclusion.

A real use case

There are more than 2.4 million different cryptocurrencies out there, according to coinmarketcap.com. Although the industry has registered monster growth during the past few years, the vast majority of these blockchain networks are useless. They don’t solve a real problem, so they probably don’t have bright futures.

XRP stands out in this regard. It was created to make cross-border payments faster and cheaper. The Ripple network does this by using blockchain technology to act as a bridge between two fiat currencies. A sender of money in one country can convert it to XRP, send it across the network to the receiver, who can then convert it into the local currency. Transactions cost less than a penny and can settle in seconds.

Given how cryptocurrencies are set up to transfer value quickly, it makes sense that the financial services realm is a target for this new technology. In the case of XRP, it’s focused on a truly gargantuan segment of the economy, which in theory adds sizable upside should adoption really take off.

Annual remittance flows sent globally are approaching $900 billion. This enormous sum doesn’t include the money sent between larger parties, like governments, banks, and corporations. If XRP can somehow control even a tiny sliver of this market, demand and the coin’s price could take off. That’s what the bulls hope for.

Clear risks

There are clear risks to always be mindful of. Regulatory uncertainty is one of them. Ripple was forced to pay $250 million in a settlement with the Securities and Exchanges Commission over the unregistered sale of coins to institutional investors, which was viewed as a victory for the crypto industry

But while a decision was made, you have to believe that XRP will probably continue getting attention from regulators. There could be appeals, and an adverse ruling could seriously crush the its prospects.

Another risk is that XRP simply faces stiff competition. There are huge banks, particularly in the U.S., that handling a lot of the money that flows in and out of the country. They all have deep pockets to invest in new technologies to bolster their competitive positions and push into new growth verticals. They’re definitely not going to sit around and let XRP steal market share.

Then there’s Bitcoin. Its market cap of $1.2 trillion, which is almost 40 times that of XRP’s, points to a deeper and more liquid market. If Bitcoin can find compelling scaling solutions that can speed up its transaction times, it could handle a higher volume of cross-border money transfers. And stakeholders might appreciate the fact that it’s decentralized and not controlled by anyone.

It’s encouraging to see XRP try to make inroads in a huge market. But I don’t think anyone knows with any level of certainty what the next five to 10 years will look like. So, if you’re comfortable taking on a high-risk bet, while also being bullish on XRP’s long-term prospects, I can understand why you would be inclined to take a small position in the digital asset. The cryptocurrency could pay off eventually.

However, it could also prove to be a losing investment. The uncertainty is too high, which is why I don’t own it.