Ripple's XRP Strategy: Liquidity and Value at the Core
Table of contents
Enhancing Liquidity Through XRP's Value
The 2018 document emphasizes the direct correlation between XRP's value and network liquidity. It states, “if XRP has a higher value, it increases the value of the solution because it increases liquidity on the network. With a higher value, XRP can convey a higher value than other currencies” (Hamilton, 2018). This highlights Ripple's belief that a higher-valued XRP enhances the efficiency of its payment network, enabling smoother and larger transactions. The document also referenced the historical significance of XRP's price surge in early 2018, when its valuation contributed to Ripple's co-founder, Chris Larsen, becoming one of the world's wealthiest individuals, underscoring the asset's potential.
Shielding Customers from Price Volatility
In the video shared by SMQKE, a Ripple representative clarified how businesses interact with XRP in their payment processes. When asked about the impact of XRP's price fluctuations, the spokesperson explained, “As a business that’s been in this industry for a long time, we know that the senders and receivers are very focused on fiat. That’s their lifeline, that’s their blood, that’s their entire business. So we hide any real visibility into the cryptocurrency XRP. So in the system, you’ll really just see a fiat-to-fiat payment option.”
This approach ensures businesses are not directly exposed to XRP's price volatility. “Because of that, we hide and protect our customers from any fluctuation in the open market. It’s irrelevant to you how much XRP equals how much Singapore dollars, for example. All you want to know is that you can make your $1 million payment into Vietnam, for example. So the customer is never exposed to any fluctuation in price of the digital asset here.” This system allows businesses to conduct seamless fiat-to-fiat transactions, with XRP acting as a behind-the-scenes bridge asset.
XRP's Fundamental Role in Ripple's Ecosystem
SMQKE summarized the information, stating, “Ripple’s solution relies on XRP being a high price.” This echoes the document's claim that a higher XRP value strengthens network functionality. While customers experience streamlined fiat transactions, the underlying efficiency of Ripple's payment solutions depends on XRP's liquidity and market value. This dual nature underscores XRP's critical role within Ripple's ecosystem, balancing user experience with the need for robust liquidity.