Understanding XRP: A guide to the payments focused crypto

The Ripple and XRP mission

Ripple, a digital payment network and protocol launched in 2012 aims to address the inefficiencies of traditional financial systems, such as slow processing and high costs in cross-border payments. The network uses XRP, its native cryptocurrency, to enable fast, low-cost international money transfers and currency exchanges. XRP serves as a "bridge currency" in Ripple’s On-Demand Liquidity (ODL) platform, eliminating the need for pre-funded accounts in global banking and improving the efficiency of international transactions.

What is XRP designed for?

XRP aims to power fast and cost-effective transactions with minimal fees.

• Primary use case: Cross-border payments, acting as a bridge currency.
  
  
• Additional use cases: Micropayments, tokenisation, DeFi and NFTs.

By addressing inefficiencies in the fiat banking system, XRP has positioned itself as a tool for modernising financial transactions, and has worked with several major financial institutions in the past. Unlike Bitcoin, its entire 100 billion supply was pre-mined at launch in 2012, with Ripple retaining a large share for ecosystem growth.

Why is XRP gaining momentum?

• Legal clarity: In July 2023, a U.S. court ruled that XRP is not inherently a security, boosting investor confidence.
  
  
• Institutional adoption: Ripple’s partnerships with banks and financial institutions have increased XRP’s real-world usage.
  
  
• Expanding use cases: Upgrades to the XRP Ledger support DeFi, NFTs, and tokenised assets, broadening its utility.
  
  
• Global adoption: Markets like Japan and the UAE have embraced Ripple’s technology for remittances and payments.

The company also recently launched Ripple USD (RLUSD), a stablecoin designed to maintain a stable value of one US dollar, which may also have contributed to the recent increases. 

XRP is a cryptocurrency with a clear purpose: revolutionising cross-border payments. Backed by Ripple’s technology and ongoing adoption by financial institutions, XRP has the potential to remain a major player in blockchain-powered finance.

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