Why Ripple’s XRP cryptocurrency could be the next Bitcoin

11th January 2025 – (New York) XRP, the cryptocurrency created by Ripple Labs, has been on a meteoric rise in recent months, surging over 350% since early November to become the third-largest digital asset. Once an also-ran in the crypto world, overshadowed by Bitcoin and Ethereum, XRP now has a market value of $141 billion, more than Mastercard or Morgan Stanley.

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Its stunning ascent reflects a speculative frenzy driven by a novel narrative: that XRP is best positioned to go mainstream as the cryptocurrency adopted en masse for international payments and money transfers. While Bitcoin has been embraced as a store of value akin to digital gold, and Ethereum’s blockchain is the foundation for decentralised finance (DeFi) apps, backers say XRP will become the preeminent utility token facilitating cross-border transactions.

“XRP is clearly becoming the standard for global payments,” says Ed Franklin, a crypto billionaire who went all-in on XRP in 2021. “In a world where the free movement of money is still shockingly difficult, XRP’s near-instant settlements at a tiny fraction of a cent per transaction will be a game-changer.”

Retail investors have piled into XRP, sparking a speculative mania reminiscent of past bubbles in Bitcoin, tech stocks, and tulips. On Reddit’s r/XRP forum, which has over 600,000 members dubbed the “XRP Army,” investors celebrate each new price milestone, share memes trumpeting XRP’s disruptive potential, and encourage each other to keep buying and holding.

“Sold the house and went all-in on XRP at 25 cents,” one poster wrote last week. “Next stop – the moon!”

XRP’s price surge has created immense wealth for early investors but also drawn criticism that it is another crypto bubble inflated by wild speculation. The token now accounts for over 10% of the total crypto market value, up from just 3% a year ago.

Unlike Bitcoin, whose capped supply gives it scarcity value, Ripple can issue up to 100 billion XRP. There are currently 50 billion tokens in circulation, with Ripple retaining over 50% in an escrow account that releases 1 billion per month to incentivize growth of its payment network.

Ripple has worked tirelessly to overcome XRP’s perceived lack of decentralisation, forming partnerships with banks, money transfer services, and payment processors worldwide. Over 300 financial firms have joined Ripple’s network, with the list of partners reading like a who’s who of global finance: American Express, Santander, SBI Holdings, and the Saudi British Bank.

“Crypto purists will always favour Bitcoin’s mathematically enforced scarcity and Ethereum’s decentralisation,” says crypto analyst Michael Novogratz. “But Ripple and XRP recognise that, for institutions to adopt crypto en masse, they need FinCen-regulated companies and asset issuers to ensure compliance. That’s a key advantage over more anarchic crypto projects.”

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Much of XRP’s recent surge has been driven by growing confidence that Ripple will prevail in its high-stakes legal battle against the U.S. Securities and Exchange Commission (SEC). In December 2020, the SEC stunned the crypto world by filing a lawsuit alleging that Ripple’s sales of XRP constituted an unregistered securities offering totalling $1.3 billion.

The SEC argued that, because Ripple retained control over the majority of XRP tokens and monetised the asset through institutional sales, XRP should be considered a security subject to federal regulations. Ripple forcefully disputed the claim, arguing that XRP is a utility cryptocurrency meant to facilitate transactions on its payment network, no different than Bitcoin or Ethereum.

For over two years, the legal battle raged as the SEC sought to compel Ripple’s executives to testify and provide records detailing the company’s XRP marketing and sales efforts. Ripple claimed many documents were shielded by attorney-client privilege, and the presiding judge has appeared sympathetic to the fintech company’s arguments.

Ripple scored a series of legal wins in late 2024 that buoyed hopes it would prevail over the SEC. In October, Judge Analisa Torres ruled that emails between Ripple employees and outside legal counsel were protected by attorney-client privilege, dealing a setback to the SEC’s efforts to obtain internal records. Then in November, Torres issued a pivotal summary judgment agreeing that XRP, the cryptocurrency itself, should not be classified as an investment contract or security under federal laws. While the SEC swiftly appealed that ruling, it was viewed as foreshadowing Ripple’s potential victory in the landmark case. With the crypto-friendly Trump administration soon taking over the SEC’s leadership, optimism grew that the regulatory cloud hanging over XRP could finally be lifted.

In November, in what was viewed as a harbinger of Ripple’s potential victory, Judge Analisa Torres issued a summary judgment agreeing that the individual XRP tokens themselves are not securities under federal law.

The SEC has appealed that decision, but Ripple’s legal prospects have brightened considerably under the new crypto-friendly leadership at the Commission. After Donald Trump’s election victory, Paul Atkins, the former SEC commissioner who dissented against regulating XRP as a security in 2020, was nominated as the new Chair.

“With this administration change and an impartial reading of the law, I’m confident the SEC’s case will be thrown out,” says Franklin. “That would remove a huge cloud of uncertainty over XRP and set the stage for it to compete on an equal playing field with Bitcoin and Ethereum.”
While the legal overhang lingers, Ripple has pushed forward aggressively to make XRP an integral part of the global payments infrastructure. In November, the company launched the Ripple Liquid USD (RLUSD), a stablecoin backed by real-world assets like cash and U.S. Treasuries.

Stablecoins have emerged as a crucial piece of crypto plumbing, allowing seamless exchange between fiat currencies and digital assets. The top stablecoins like Tether, USDC, and BUSD have a combined market value of over $150 billion.

“RLUSD supercharges the XRP ecosystem by providing fiat liquidity,” says Monica Long, President of Ripple. “Whether it’s financial institutions, crypto exchanges, or retail users, they can now easily move between dollars and XRP using our secure, regulated, asset-backed stablecoin.”

Ripple has also accelerated adoption of its On-Demand Liquidity (ODL) service, which uses XRP as a bridge asset to facilitate real-time cross-border payments with end-to-end tracking. Designed to be an improved alternative to SWIFT for institutions, ODL provides instant settlement with transparent fees 50-60% lower than traditional foreign exchange.

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Over 40 payout markets across six continents now use ODL, with transaction volumes running at an annualised rate of over $30 billion. Bhutan’s central bank has even integrated ODL for cross-border transfers to benefit its citizens working abroad.

“Thanks to ODL and RLUSD, we’re truly broadening the use cases and liquidity for the XRP ecosystem,” says Long. “It’s not just cheaper and faster than legacy payment methods, but it provides auditability, transparency, and programmability that is simply impossible using antiquated 20th century financial rails.”

With a market cap now nearing $150 billion, XRP has already entered the big leagues of crypto. But advocates see an even loftier ceiling if it succeeds in becoming the de facto currency for global payments and trade settlement.

“XRP’s innovative technology makes money transfers as easy as email,” says Franklin. “It might not be the first cryptocurrency to join Bitcoin in hitting $1 trillion and beyond.”

While retail mania has powered much of XRP’s breakout, institutional interest is accelerating as well.

In December, the first XRP exchange-traded funds were approved by regulators, opening the floodgates for mutual funds and pensions to gain exposure. Within two weeks, over $5 billion had poured into the new XRP ETFs from major asset managers like BlackRock, Fidelity, and Vanguard.

Crypto trading platforms have also scrambled to list XRP funds and derivatives to meet soaring demand. CME Group recently launched XRP futures for the first time, while Crypto.com is offering interest-bearing XRP lending products with annual percentage yields over 10%.

“We’re seeing enormous institutional flows into XRP as blue-chip investors reposition their portfolios,” says Eric Steinman, Head of Crypto Investment Strategy at U.S. Bancorp Wealth. “Advisors are realising it offers one of the most compelling risk/reward opportunities in digital assets.”

However, with XRP still down over 80% from its late 2021 highs around $3.40, sceptics argue the token remains in a speculative bubble fuelled by hype and momentum-chasing. Scars remain from the last crash when XRP shed over $130 billion in market value in less than two months.