Ripple (XRP) is up 36% today alone, and has climbed to be the second-most valuable cryptocurrency on the market.
But apart from its explosive growth, this crypto-coin has long been known to be favored by Wall Street. Banks have already seriously embraced this cryptocurrency’s technology. RippleNet, the company’s distributed ledger network, has already nabbed numerous banking clients. Big-time companies like UBS and Santander have already started working on developing payment systems using its cheap and fast blockchain technology.
But there is a myth going around – on reddit and xrpchat in particular – about the blockchain’s native currency, XRP. Some say that it is worthless, and that the only value is in the underlying technology. The argument is that once banks have integrated with the transfer technology, they can develop their own tokens. Designing new tokens may mean they can bypass the need for XRP (to complete transfers).
But there are two very important things that can be said against this theory.
The Myth that Ripple (XRP) Won’t be Used by Banks is Highly Unlikely
First of all, the very structure of RippleNet’s product requires XRP. The whole point of the banking product is to allow bank-to-bank transfers to happen instantly. Banks who sign on to use the ledger technology and participate in bank-to-bank transfers must do one important thing first.
They must keep a certain amount of XRP on reserve. Those reserves maintain the security of the settlements.
Not only do all participants have to keep reserves of XRP in order to complete transfers, they can also only transfer XRP to other ledger addresses. Moreover, other types of currencies can’t instantly and cheaply be sent across the globe.
Ripple (XRP) and Bitcoin (BTC) are clearly the favored crypto-coins of this major banking organization. And with hundreds of other banking clients already signed on, Ripple is taking off. Its cryptocurrency, XRP, is intertwined with RippleNet’s success. The idea that the technology can be disjointed from the currency is not likely at this point in time.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.