Even after securing the top ranks in the world, one of the leading cryptocurrencies, Ripple’s native currency XRP is struggling to prove its potential. According to critics, XRP has not shown adequate traction among businesses to justify its current valuation.
Currently, XRP”s traction can be interpreted as its valuation as a medium of the transaction between banks on the Ripple framework or as an asset.
As a result, the role of XRP in Ripple’s landscape has become a critical factor for Ripple’s overall valuation in the market. XRP’s utility in Ripple’s bouquet of products is still somewhat of an enigma.
How does XRP work in Ripple’s Product?
At present, cross-border transactions exist between technology systems that are entirely disconnected. With the help of inter ledger protocol, Ripple makes it possible to route payments with interconnected ledgers to connect the systems.
The ledgers constituting this protocol can be a part of the financial institution’s network or can be trusted nodes in a network that traverse multiple entities.
In the end, it results in increasing the process of transaction speed for cross-border payments.
Meanwhile, the experts suggest that interledgers cannot be considered as the permanent solution to resolve the issue of pre-funding fiat currencies in accounts for foreign exchange transfers. Some accounts are maintained by financial intermediaries (known as Nostro & Vostro accounts) that ensure liquidity for their foreign exchange transactions at the end of the process.
Role of XRP
XRP is used by Ripple’s products to ensure instant liquidity. For instance, a renowned Ripple product, xRapid, utilizes XRP as a “bridge asset”. At some point, XRP turns out to be the potential asset used by financial institutions or investors to manage two different fiat currencies.
Even after securing the top ranks in the world, one of the leading cryptocurrencies, Ripple’s native currency XRP is struggling to prove its potential. According to critics, XRP has not shown adequate traction among businesses to justify its current valuation.
Currently, XRP”s traction can be interpreted as its valuation as a medium of the transaction between banks on the Ripple framework or as an asset.
As a result, the role of XRP in Ripple’s landscape has become a critical factor for Ripple’s overall valuation in the market. XRP’s utility in Ripple’s bouquet of products is still somewhat of an enigma.
How does XRP work in Ripple’s Product?
At present, cross-border transactions exist between technology systems that are entirely disconnected. With the help of interledger protocol, Ripple makes it possible to route payments with interconnected ledgers to connect the systems.
The ledgers constituting this protocol can be a part of the financial institution’s network or can be trusted nodes in a network that traverse multiple entities.
In the end, it results in increasing the process of transaction speed for cross border payments.
Meanwhile, the experts suggest that interledgers cannot be considered as the permanent solution to resolve the issue of pre-funding fiat currencies in accounts for foreign exchange transfers. Some accounts are maintained by financial intermediaries (known as Nostro & Vostro accounts) that ensure liquidity for their foreign exchange transactions at the end of the process.
Role of XRP
XRP is used by Ripple’s products to ensure instant liquidity. For instance, a renowned Ripple product, xRapid, utilizes XRP as a “bridge asset”. At some point XRP turns out to be the potential asset used by financial institutions or investors to manage two different fiat currencies.
In this case, Ripple acts as “third-party liquidity provisioning” to which financial institution takes advantage of while purchasing an equal amount of XRP and sending it through Ripple’s network. On the other hand, for banks, it makes a way to deal with a transaction without maintaining a sourced relationship with every other similar organization.
XRP as a Currency
Like, we are aware of the U.S dollar role in the international markets to bridge the transactions between different currencies worldwide, XRP’s role is similar in Ripple’s network. XRP transactions can be used in various Ripple’s products, including xRapid, xCurrent and xVia.