Ripple’s XRP: A Cryptocurrency or Private Network’s Token?

For some investors, XRP has enormous potential as a sort of ‘decentralizable’ coin and, therefore, represents one special kind of legitimate crypto.

On the other hand, traditional crypto enthusiasts see XRP as an insult to decentralization since it works in a relatively closed network. Nevertheless, not even its haters deny that Ripple’s developments could lead to an increase in the value of XRP in the medium or long term. Thus, having even just a basic grasp on what Ripple does and what kind of asset XRP is are very fundamental topics in Crypto.

Essential fact: Ripple and XRP are not the same thing! Ripple is a private company based in the United States. It is dedicated to software development for the banking sector. Again, much emphasis needs to be placed on this fact: Ripple is a new kind of actor in the traditional banking world that builds special types of products for a niche group of clients, banks. XRP is touted as an independent currency for banks and payment providers that can facilitate global payments instantly and at a fraction of current costs.

The company states that “Ripple provides one frictionless experience to send money globally using the power of blockchain. By joining Ripple’s growing, global network (RippleNet), financial institutions can process their customers’ payments anywhere in the world instantly, reliably and cost-effectively. Banks and payment providers can use the digital asset XRP to further reduce their costs and access new markets. With offices in San Francisco, New York, London, Mumbai, Singapore and Sydney, Ripple has more than 200 customers around the world.”

The currency was originally created by Ripple Labs and offers some degree of openness and decentralization, since it is under the control of an expanding network of trusted nodes spread throughout the world continually increasing over time. With this consideration, it can be assumed that the asset is not actually under the control of Ripple nor are they engaged deeply in marketing XRP. Rather, the private company is dedicated to designing and creating their fintech. Currently, they have three main software systems that they offer to the world’s banks: xCurrent, xRapid and xVia.

xCurrent help banks scale their ability to conduct transactions worldwide in a very cheap and incomparably fast way. Currently, a bank can make you wait for several days in order to verify an international transaction for you. xCurrent solves this problem with instant transactions at penny prices. xCurrent does not need to use the XRP currency. It’s optional.

xRapid is a system that helps banks have liquidity available and not suffer from lack of funds when conducting global transactions at high scale. xRapid does use XRP to provide liquidity. XRP also serves as a bridge between currencies within the system. Thanks to XRP, Ripple plans to offer a very modern global remittance system where XRP operates as an intermediate between currencies.

xVia, like xCurrent, does not require the use of the digital currency XRP either. xVia is considered as a new version of xCurrent with much higher level functionality, specially designed to enable financial transactions among bank customers and non-bank customers. Individuals and businesses will be able to interconnect and make transactions through xVia with a modern system that most banks cannot offer nowadays.

All those who worry about whether they should consider XRP a cryptocurrency or a private currency will not face an easy decision process. “Do your own research” (DYOR)! This is the key! Ripple and XRP seem to have true potential. Investors must cultivate their own opinion on whether this constitutes a good project based on their sole research on the company, their trusted-node system, and their technologies offered to institutions, as well as a series of new use cases that utilize XRP: global remittances, payment systems and even – according to some investors – store of value.