Ripple hits a record high and is now up nearly 120 percent in a week

Ripple, the world's second-largest cryptocurrency by value, hit a record high on Wednesday as its strong rally continues.

The digital coin reached $2.51, according to data from CryptoCompare, which tracks the price of various cryptocurrencies based on different exchanges.

This passed the previous all-time high of $2.44 on December 30.

Ripple's strong rally has seen its price increase by over 124 percent in one week, while it has surged over 39,600 percent in one year.

What is ripple?

Unlike bitcoin, Ripple is a company that has created coin known as XRPthat is aimed at enterprises.

Ripple markets itself as a cross-border payments solution for large financial institutions based on blockchain technology.

Currently, an international payment may take a few days to complete, and at a high cost. A headache for banks is high-volume, but low-value, transactions — the kind that Facebook might pay out to app makers, for example. These can often be expensive and unprofitable for banks because it takes a lot of effort to move the money and the percentage cut won't be as high as for a larger transaction.

Ripple is trying to solve this problem via its technology. XRP can be used by enterprises to get instant liquidity needed in a high-value transaction, without having to pay fees.

XRP acts as a bridge between fiat currencies during a transaction. Ripple said transactions in XRP can be settled in four seconds, faster than any major cryptocurrency right now.

Why is it rallying?

Ripple has been conducting trials with a number of financial institutions, including American Express and Santander.

Its price was also helped by news in December that Japan's SBI Holdings and SBI Ripple Asia, which was formed as a partnership between the two firms in 2016, created a consortium with Japanese credit card companies to utilize blockchain.

Blockchain is the technology that underpins cryptocurrencies, including Ripple.

There is also a sense that investors are looking at alternative digital tokens beyond bitcoin. Bitcoin's dominance of the cryptocurrency market hit its lowest level ever on Tuesday, according to data from Coinmarketcap.com.

Source: https://www.cnbc.com