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XRP has long been known for its cost-effective cross-border payment solutions and is poised to change the digital transaction landscape in the future. Enthusiasts believe that this crypto has the potential because of its decentralized finance and smart contract features. Can it really revolutionize digital transactions?
Key developments of XRP in recent times
The Ripple blockchain, which supports XRP, was created specifically for seamless money transfers. It has seen a lot of developments and challenges in recent times. Below are some of the key developments that point to a promising future for the cryptocurrency.
Fast transactions
XRP, when used for payments, is known for its lightning speed. This is why Ripple casino is a popular option globally. On average, the processing time for an XRP transaction is around 3 to 5 seconds. However, this figure can be higher if there is high network traffic. But the chances of this happening are quite low.
The transactions per minute rate of XRP is also quite impressive. Ripple is capable of processing 1500 transactions per second. While this may be lower than a few other blockchains, it is still a better option for international remittances.
Strategic partnerships
XRP’s blockchain has formed strategic partnerships over the years to improve liquidity and cross-border payments. Some notable partnerships over the years include one with BRD. This crypto mobile wallet company partners with Ripple to integrate its native crypto XRP into the BRD wallet. Users on the platform can make transactions with XRP today.
The MoneyGram partnership has also been a contributing factor to the adoption of XRP in the digital world. This partnership focuses on xRapid, a product of Ripple that uses XRP to facilitate cheap and rapid cross-border payments. MoneyGram benefited from this partnership with a $50 million investment and some extra million to expand the collaboration in 2019.
Another notable strategic partnership is the collaboration with Tron. The CEO of Tron had mentioned that Tron is a partner of Ripple in China for cross-border payments. Other collaborations include Santander Bank, Banco Rendimento, the Bank of Thailand, the Saudi Central Bank, and the Royal Monetary Authority of Bhutan.
Technological integration
Ripple is integrating smart contracts into the XRP ledger in a bid to improve its capabilities. The company integrated Ethereum-compatible smart contracts so it can appeal to a wide developer community.
This addition has naturally expanded the network’s functionality, allowing developers to use familiar programming languages and tools. Also, it aims to enhance scalability and security for the DeFi sector.
Regulatory clarity
While there have been some regulatory hurdles in the United States, XRP is still poised to see the end of the ongoing lawsuit. A federal judge recently ruled that XRP is not a security. However, the ruling limited it to secondary market transactions. The point of the ruling was to differentiate between the programmatic sales and institutional sales of XRP.
This ruling is considered a partial victory as the court decided without considering the fact that users of XRP didn’t have shares in Ripple, the parent company. So, it emphasized that programmatic buyers who were below 1% couldn’t have known if their payments were sent to Ripple.
The battle has been ongoing for three years and has provided some clarity on the status of the cryptocurrency. In the same vein, it will also help shape the regulatory framework for all cryptocurrencies.
Broader applications of XRP
Besides DeFi and remittances, XRP has also dabbled in tokenized assets and decentralized applications. So far, its ledger supports central bank digital currencies, also known as CBDCs. It also supports stablecoins to bridge the gap between financial institutions that seek blockchain-based solutions.
XRP is also considered for its use in exchange-traded funds. The Securities and Exchange Commission recently acknowledged applications from the New York Stock Exchange Grayscale and Arca to both list and trade shares from the XRP trust. The approval of these ETFs will inject around $8 million in assets into XRP, driving the price to new heights.
There has been some talk about XRP delving into the Internet of Things and other emerging technologies. While the focus of the token was to facilitate seamless and rapid cross-border payments, its underlying technology may be able to support IoT applications. At this time, the XRP ledger supports tokenized assets, remittances, and decentralized apps. This can also be used in IoT for quick transactions.
Potential challenges for XRP
XRP has faced more challenges than the average cryptocurrency. The controversy it faced surrounded an argument that XRP should be classified as a security under United States law. In December 2020, the US SEC filed a lawsuit alleging that Ripple sold XRP without registering it as a security, raising $1.3 billion.
Ripple responded and argued that XRP is a digital currency, just like any crypto, and is not a security. However, the SEC’s concern stemmed from the fact that Ripple controls XRP supply. Therefore, promoting XRP’s value meets the criteria for a security.
As the legal battle continued, in 2023, a judge ruled that XRP indeed violated federal securities law. However, the judge maintained that secondary sales on crypto exchanges didn’t. Another more recent ruling vindicated XRP as well.
SEC intends to appeal these decisions and challenge the recent ruling about programmatic sales of XRP.
Besides its legal battles, XRP has also experienced some centralization concerns in the past. Investors wonder what will happen in the future since Ripple Labs holds a large number of XRP tokens.
What does the future hold for XRP?
Considering its innovation and strategic partnerships, XRP will likely begin revolutionizing the digital transaction space in 2025. In addition to cross-border transactions, XRP has delved into the DeFi space and tokenomics. The recent victory in the federal lawsuit gives credence to this possibility. However, there are still concerns about volatility and centralization. One of these issues affects all other cryptocurrencies, but adoption can go a long way toward reducing the market sentiments that lead to volatility.
