For a newbie that’s just starting out with crypto, Bitcoin and Ethereum may seem like the best the crypto market has to offer. They’ve made millions of investors rich, consistently held the top two spots, and dominated the news, to name a few reasons. But scratch beyond the surface, and you’ll unearth another, top-tier crypto making waves. It’s all over the news these months, boasting impressive achievements like collaborations with global, reputable financial service organizations and over 1.2MN payments processed on its network over just one day. The talk is about XRP – a crypto that, even when it occasionally trades places with Tether for third, consistently finishes strong at the end of most quarters.
It’s important to note that there’s no such thing as a foolproof crypto. Milestones like those of XRP may make some omit that it’s not all roses. The project has faced its fair share of setbacks: a 3.6% drop in a single day after a market selloff, a decline in the amount of XRP held by exchanges, and delays in the approval of new XRP ETFs, which fueled some skepticism. Yet, when you take a closer look at cryptos and their market positions, it’s clear that XRP still has a lot to offer. If you want to learn how to buy XRP, make sure you’re familiar with the basics of crypto and this currency in particular.
So, how is this crypto maintaining its edge?
What exactly is XRP?
First and foremost, it’s essential to distinguish XRP from Bitcoin (BTC), as many people mistakenly use the flagship cryptocurrency as a substitute for the entire cryptocurrency market. While blocks are continuously mined in Bitcoin’s case, XRP was released in a single session of on-ledger, pre-mined 100BN tokens. The network’s launch coincided with the release of the coins, and the parent company, Ripple, became the assigner that controls the bulk of the XRP supply. XRP is gradually released from the escrows that have been holding coins ever since its debut.
While it’s not the fastest to process transactions, XRP remains a favorite among banking and financial service organizations. Settlements with XRP take between three and five seconds – way better than Bitcoin’s reported ten minutes. Also, XRP’s fees are super user-friendly, often dropping below a cent.
XRP’s key pitch? To become a strategic bridge and currency that connects decentralized infrastructures with traditional financial systems, and making cross-border transfers easier and mainstream. It’s no wonder that it has always focused so much on efficiency and speed – two characteristics that differentiated it from its competitors from the very beginning.
What keeps XRP relevant
Many cryptocurrencies’ visions lack real-world practicality, but XRP’s ethos has always been to solve a real-world problem – the expensive and slow money transfers. The World Bank estimated the global mean cost of sending $200 in 2023’s last quarter at 6.4% – a figure that XRP strives to see lower. Traditional banking systems often impose high fees for cross-border settlements, which is where international money transfers become expensive and inefficient. Underdeveloped countries have found a key ally in cryptos like XRP, thus using them where internet access and know-how exist.
XRP uses Ripple’s On-Demand Liquidity (ODL) technology and allows almost-instant transactions with low fees. To exemplify, a SWIFT transaction may incur charges between $26 and $50. One of XRP’s fundamental goals is also to replace the global transaction standard SWIFT; though such an ambition is far-fetched now. However, XRP remains a viable solution to send and receive money. Its efficiency and scalability are two reasons why more than 300 financial institutions globally have integrated its operating system into their activity. These partnerships facilitate seamless cross-border payments and improve the accessibility and reliability of international money transfers, making cross-border transactions more appealing.
Important collaborations
Speaking of partnerships, the most recent and perhaps most important collaboration XRP has secured is a memorandum of understanding with DBS and Franklin Templeton, dated September 17 of this year. This partnership has paved the way for the launch of tokenized lending on the XRP Ledger (XRPL), marking an important step toward integrating XRP into mainstream financial services.
Santander, Standard Chartered, SBI Holdings in Japan, and other banks have started educating and adopting Ripple’s solutions, marking partnerships that highlight how XRP isn’t just a speculative, exchange-traded coin, but a pioneering infrastructure layer for real-world finance.
How a lawsuit turned into an ally
XRP’s story doesn’t boil down to just tech upgrades and partnerships; a significant part of its journey was marked by a regulatory battle with the SEC in the U.S. The watchdog argued that XRP should be treated as a security, accusing Ripple of selling unregistered security products and generating more than $1.3BN as a result. However, the verdict was announced, and Ripple was found innocent, with the ruling stating that Ripple is a security only when sold to institutional investors, not retail investors. This marks a huge achievement for XRP and boosts investors’ trust in its rationale.
The years-long lawsuit initiated by the SEC against Ripple has become one of XRP’s strongest suits this year.
Where XRP leads as a model
XRP has a few unique traits that make it a standout. For instance, it relies on a consensus protocol to boost efficiency and reduce dependence on energy. XRP’s ledger can process up to 1,500 transactions per second (TPS), which makes a huge difference from Ethereum’s reported 30 TPS. Such figures are indicative of healthy institutional demand, though this seeming advantage brings about the risk of more volatility. Leveraged markets can max out on both wins and losses since they’re so financially powerful.
The XRPL has also witnessed the recent release of RLUSD, a Ripple dollar-pegged stablecoin, on the network, with XRP used to pay transaction fees. This further improves XRP’s real-world use cases and facilitates its image.
XRP’s future depends on a few factors, like how it will overcome its legal hurdles, how investor sentiment will change, and how much individuals will use Ripple’s payment services. Stay close to see what the future holds for XRP.
