Can ripple cryptocurrency (XRP) make a splash?

July 19, 2018
Chris Wheal

Ripple’s XRP cryptocurrency has had an extremely difficult year; it is now worth a fraction of the all-time high it reached in January. Currently trading at $0.47, the crypto is about 88% down from the peak of $3.84 attained early this year.

Along with the general euphoria surrounding cryptos in general, XRP was boosted by high-profile partnership agreements between Ripple and various big banks and payments providers.


For many, it seemed like a no-brainer that these big tie-ups would ultimately see XRP enter into wide usage; not just bought by speculators looking to make a quick profit, but increasingly used as an actual currency and exchange of value.

So far though, it hasn’t really worked out like that; many crypto enthusiasts are therefore continually asking the question as to when, or even if, XRP will become a digital token in common real-world use.

Ripple’s efforts to make this a reality are continuing apace.

“With our Xpring effort we’re trying to incentivise the development of an ecosystem around XRP. With what Ripple’s doing on the banking side, we’re trying to position XRP as a sort of intermediary asset that can provide liquidity between other assets. I think if those efforts are successful that’s going to be a reason to use that asset,” explains David Schwartz, chief technology officer at Ripple.

Ripple's David Schwartz

Ripple’s David Schwartz says the company is trying to encourage an ecosystem to develop around XRP Source: Ripple


Many investors had thought that XRP already would be in wider use by now, an understandable view given the commercial momentum behind Ripple’s technology. In October, Ripple announced it had reached the milestone of signing up 100 financial institutions to RippleNet.

“Network effects take off as payments volume builds and financial institutions begin to tap XRP to unlock the full value of blockchain,” said Ripple at the time.

Ripple markets RippleNet as a cross-border payments solution, a payments network that seamlessly connects the likes of banks and payment providers around the world.


It emphasises the advantages of much faster settlement times and lower costs versus traditional payment systems but also points to the high level of connectivity for RippleNet users and the real-time traceability of funds offered by its blockchain technology.

News that American Express, a big US-household name was getting involved with RippleNet alongside European banking giant Santander provided a major boost to sentiment last year.

Then, early this year, there was the revelation that global payments giant MoneyGram was to test xRapid, a Ripple digital payments solution that uses XRP.

Santander has partnered with Ripple


All these developments sound promising, but a lot of the announcements were really about big players trialling Ripple’s technology rather than replacing their existing solutions overnight.

The other major point that some investors in XRP may have overlooked is that even if big names use RippleNet, that doesn’t mean they are going to necessarily become major users of the XRP digital currency itself.

Users are actually able to send payments in any major fiat currency through RippleNet, including US dollars or euros.

Regulation worries

Apart from the questions over the prospects for real-world use cases of XRP beyond investment/speculative purposes, there are also the worries over potential regulation.

The debate over centralisation and the degree of control exercised over XRP by Ripple rages on. Some commentators have argued that because it is more centralised than bitcoin in terms of the control it exerts, regulators could ultimately decide to impose a more restrictions around XRP compared with bitcoin and certain other digital currencies.

Unlike bitcoin, and many other leading cryptos that are decentralized, XRP cannot be digitally mined. The majority of XRP coins are also still controlled by Ripple. All the XRP coins currently in circulation were created in 2012, when Ripple was then known as OpenCoin. At launch, 80% of coins were allocated to OpenCoin, while 20% went to the individual founders.

The centralisation debate has often been used to explain Coinbase’s decision to not list XRP on its exchange, despite it being the third largest crypto coin in the world by market capitalisation, behind only bitcoin and ethereum.

Ripple, for its part, vehemently rebuts the suggestion that its ownership of a large number of XRP coins means the crypto is centralised.

“XRP is open source and it was not created by our company, so that existed as an open source technology. We created a company that was interested in modernizing payments and then began using that open-source tech to do so … We didn’t create XRP … What we do have is we do own a significant amount of XRP, it was gifted to us by some of the open-source developers that created it. But there’s not a direct connection between Ripple the company and XRP,” said Ryan Zagone, director of regulatory relations at Ripple, as he spoke to a UK parliamentary committee earlier this year.

More recently, Ripple has been grabbing the headlines in the US for its efforts to put some of its vast $30bn XRP coin pile into the hands of charities.

For example, there was the recent announcement through a popular US television show that it was making a whopping $29m XRP donation to, a charity that aims to fund US state school classroom projects.

This should not be a bad thing; distributing its vast cash pile ethically may win some plaudits and may also ultimately encourage more XRP spending in real-world uses.


In May, Ripple launched its Xpring initiative, a programme offering grants to nurture startups. All the entrepreneurs helped by Xpring use “XRP and the XRP Ledger, the open-sourced, decentralized technology behind XRP, to solve their customers’ problems in a transformative way.”

Ripple brought in former Facebook executive Ethan Beard to head the Xpring programme.

“At Facebook, we saw companies in areas like gaming, music, and news use our platform to become big businesses. Blockchain and digital assets have the ability to solve important problems and XRP – with it’s speed, scalability and demonstrated real-world use case – is a great tool for startups and entrepreneurs to build businesses around,” says Beard.

The launch of Xpring therefore marked another strand of Ripple’s strategy to promote real use cases for XRP.

Xpring offers grants

Xpring offers grants to nurture startups Source: Ripple

Financial use

Despite the multiple agreements touted between big financial names and Ripple, thus far the real use cases of XRP within the financial services sector appear to be limited.

Ripple’s Ryan Zagone came up against a good deal of scepticism on this front when he attended the UK parliamentary committee earlier this year. Giving a testimony at the same hearing was Martin Walker, director of the non-profit Centre for Evidence Based Management and a former product developer of blockchain company R3.

Walker poured cold water on Ripple’s hopes of getting big firms to use XRP as a bridge in international transactions between traditional fiat currencies, a status typically afforded to the US dollar at present.

“You need someone to provide the liquidity to be able to change into and out of Ripple. And holding Ripple, a currency which has seen its price drop 80% and then back up 100% in the course of the last two months is just not credible. So, putting cryptocurrencies into the financial sector is a huge source of risk,” Walker told the committed in early May.

Then there’s the apparent success of Ripple xCurrent software to consider; it enables banks to move money seamlessly across borders, but without even requiring them to use XRP.


It’s anyone’s guess where XRP will be trading in six months from now. On the downside, there’s the widely cited risk that US regulators may decide that XRP is an investment security, and therefore subject to various restrictions. This would of course make it even less likely for real-world uses cases in XRP to proliferate.

The US Securities and Exchange Commission (SEC) is generally thought of as being more likely to designate digital coins as securities if it believes a given company is exerting significant control. At the same time, such a decision is unlikely to be straightforward; there are a variety of factors that the SEC considers.

Some US lawyers believe XRP runs a greater risk of attracting this label if it pursues strategies that promote XRP, be it as a speculative investment or as a token with real-world use.

“Any time you are putting XRP to work to defend it or buy good will, you are going to hurt your case that you aren’t a security,” says Lawson Baker, a former attorney and founder of the cryptocurrency consulting firm RelayZero.

On the upside, XRP could benefit from any new general bull run for cryptos, especially as it’s currently the world’s third largest by market capitalisation.

Any big breakthroughs in getting more traction in real-world use cases would be another positive catalyst. The signs are though, that at best we should only expect gradual, steady progress on this front.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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