Author | Huo Huo
Produced by | Vernacular Blockchain
Since Trump won the U.S. presidential election on November 5, a number of cryptoassets led by Bitcoin have surged, with Ripple’s XRP performing the most prominently. According to news on December 2, XRP surpassed Solana and Tether (USDT) to become the third largest crypto asset by market capitalization, returning to the level before the 2020 SEC VS Ripple lawsuit.
Ripple was once considered a blockchain technology adoption partner for many financial encryption institutions around the world and became famous. This was also a rare representative example of traditional "financial giants" participating in the wave of digital gold, blockchain, and PayFi technologies. One of the "footprints", will Ripple be a "counterattack" by the financial giants this time?
01. Development history
Ripple’s history dates back to 2004, with a payment platform called RipplePay originally created by developer Ryan Fugger. RipplePay's goal is to enable individuals and businesses to make peer-to-peer payments without having a bank account. Ryan Fugger designed a credit system based on trust. Users can directly conduct transactions or cross-border payments through mutual trust without relying on intermediaries in the traditional banking system, thus effectively reducing transaction costs.
In 2011, Jed McCaleb and Chris Larsen, who had technical backgrounds, took over RipplePay and decided to develop it into a blockchain-based payment system. Therefore, in 2012, they established OpenCoin to manage RipplePay, released the decentralized payment network protocol RippleNet and the token XRP based on the Ripple protocol, and began to promote XRP as a "bridge token" for cross-border payments. With business development, in 2015, OpenCoin officially changed its name to Ripple Labs in order to better promote Ripple technology and payment network.
It is worth mentioning that Chris Larsen was once a famous serial entrepreneur in Silicon Valley. In addition to Ripple, he also founded E-Loan and Prosper, both of which achieved great success. Jed McCaleb is one of the founders of the early Bitcoin trading platform Mt. Gox. Although Mt. Gox later collapsed due to security breaches and funding issues, McCaleb’s early experience provided him with a deep understanding of the cryptocurrency market and accumulated connections and reputation in the industry. Although he later left Ripple, he played a crucial role in its early development, helping Ripple build its core technology and ecosystem. The current chief executive officer (CEO) Bradley Garlinghouse has served as a senior executive in large companies such as AOL and Yahoo!, and has extensive experience in the fields of financial technology and blockchain.
With the background of its founder and early dividend advantages, Ripple has received multiple rounds of investment support since its establishment, attracting the participation of many well-known venture capital institutions. Investors include Andreessen Horowitz, IDG Capital Partners, Valar Ventures, Lightspeed Venture Partners and others. These investments provide Ripple with sufficient funds to promote its technology research and development and market expansion.
In terms of market development, Ripple not only targets general users, but also attaches great importance to cooperation with traditional financial institutions. By 2013, Ripple was not only being tried and used by some small financial institutions, but also cooperated by large financial institutions. By 2014, Ripple officially gained multiple partners, including cross-border payment companies such as IDT Corporation and Earthport, and also cooperated with many banks and financial institutions around the world (such as Western Union, Santander Bank, PNC, etc.). This has changed the traditional cross-border payment model, making global payments more efficient and transparent, making cross-border payments no longer dependent on the foreign exchange market.
It is particularly important to note that Ripple Labs has two products, one is the Ripple protocol that is cooperated and adopted by many banking institutions we mentioned, and the other is the crypto asset XRP. These two concepts are easily confused. People often mistakenly believe that banks are adopting XRP assets on a large scale. In fact, the Ripple protocol adopted by banks is only a payment and settlement solution and does not rely on XRP, a crypto asset. At the time the XRP asset was just an option. Overall, the Ripple protocol and XRP are mutually compatible but independent of each other.
In 2018, Justin Sun also became the ambassador of Ripple in China, responsible for promoting the promotion and application of Ripple and XRP in the Chinese market.
In 2014, OpenCoin, the predecessor company of Ripple, was also named one of the "50 Smartest Companies in the World" by (MIT Technology Review). Over time, Ripple continues to strengthen its cooperation with global banks and payment institutions, and gradually enters the mainstream financial circle. This trend is also reflected in the price of XRP.
When first issued in 2012, the price of XRP was only a few cents. With the launch of the Ripple protocol and cooperation with some financial institutions, the price of XRP gradually increased between 2013 and 2014, reaching a maximum of about $0.10. At the end of 2017, driven by the bull market in the entire crypto market, XRP experienced its first significant rise. Especially in December 2017, the price of XRP exceeded $3 and hit a record high, becoming the third largest cryptocurrency by market value at the time. Cryptoassets.
In 2018, as the market bubble burst, XRP prices fell back to around $0.50 and entered a relatively stable period until 2020 when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, accusing it of not registering XRP as a security. The case attracted widespread attention and became an important legal disturbance in the encryption industry. It also had a significant impact on the price of XRP, causing the price to drop.
Nonetheless, XRP prices briefly climbed back to around $1.80 in 2021 as the overall market rebounded and some court cases were won. Entering 2022, XRP price has spent most of the time trading below $0.50 due to ongoing legal regulatory challenges and volatile market sentiment. By 2023, Ripple had another partial victory in the lawsuit, and market confidence in XRP was restored, with the price rising to around $0.90.
However, affected by multiple factors such as market sentiment, Ripple's business expansion and the progress of legal proceedings, the price of XRP will be stable between US$0.70 and US$1.00 before November 2024, which is far from its peak.
After a rally in November, as of December 2, XRP’s market value surpassed USDT and became the third largest crypto asset by market value, returning to the level before the SEC VS Ripple lawsuit. So what are the factors driving renewed interest in XRP?
02. Factors behind the rise
1) Turnaround in the Ripple vs. SEC lawsuit
The most direct factor in the rise of XRP stems from key developments in more than four years of difficult litigation between Ripple and the SEC.
Because the lawsuit between Ripple and the SEC has been a major obstacle to XRP price growth since 2020. On December 22, 2020, the SEC formally filed a lawsuit against Ripple and its founders Bradley Garlinghouse and Christian A. Larsen, alleging that since 2013, Ripple and its founders have made approximately US$1.38 billion in profits from the sale of XRP. For less than $100 million, XRP is a registered security for less than $100 million, violating the registration requirements of the federal securities laws. Ripple maintains that its actions were legal and continues to defend itself against the lawsuit. Although the lawsuit continued, under pressure from the SEC, during this period multiple mainstream trading platforms such as Coinbase and Binance US announced that they would delist XRP trading.
However, recent case and market developments suggest that the Ripple case is expected to be properly resolved.
We know that SEC Chairman Gary Gensler’s strict regulatory policies in recent years have once put many crypto projects in deep trouble, and he has also been called the “public enemy of the currency circle” for this reason. However, with the news that Gary Gensler is about to step down in January 2025, the market's expectations for a friendlier regulatory environment have been ignited. More importantly, this also means that the protracted legal dispute between Ripple and the SEC is expected to usher in. solve.
According to a report by Bitcoin.com on December 2, former Chairman of the U.S. Commodity Futures Trading Commission (CFTC) Chris Giancarlo said that under the leadership of a crypto-friendly government, the SEC may drop its lawsuit against Ripple. He believes that the Trump administration may shift to a more pro-crypto policy, and the SEC will also re-examine the regulatory stance on crypto assets, including the identification of XRP. Giancarlo has also written legal analysis arguing that XRP should not be considered a security and has been an advocate for greater regulatory transparency and looser treatment of digital assets.
A previous (Washington Post) report stated that Trump’s advisory team is evaluating multiple candidates, including some officials and financial executives who have publicly supported the encryption industry. It is worth mentioning that Chris Giancarlo is regarded as a popular candidate for the position of "crypto czar" in the Trump administration.
There is no doubt that the market is predicting that the new SEC leaders may adopt a more relaxed and pro-crypto industry attitude, thus bringing new opportunities to XRP and other projects that have been subject to regulatory pressure. It is foreseeable that if the new chairman promotes policy changes, Ripple's lawsuit may be settled or dropped, and the regulatory environment for the entire crypto industry may also change. This will be a major policy boost for once-suppressed projects such as Ripple, Binance, and Coinbase. Under this bullish influence, XRP price rebounded strongly, with a single-day increase exceeding 35%, setting a new high in the past three years.
2) The Trump administration is friendly to encryption development
The dust of the 2024 US presidential election has settled, and Republican candidate Trump was elected as the next president. During the campaign, Trump promised to build the United States into the "global cryptocurrency capital" and vigorously support the encryption industry. For details, please refer to the previous article: (Breaking: Trump wins the election, Bitcoin ushered in the friendliest day 1st U.S. Government). This news brought a huge confidence boost to the market, taking the lead in promoting the rise in the price of crypto assets led by Bitcoin, making Bitcoin begin to sprint towards the $100,000 mark.
And on November 14, news emerged that President Trump wants to eliminate all capital gains taxes on cryptocurrencies issued by U.S. companies, which would make all profits made by ADA, ALGO, HBAR, and XRP completely tax-free because of their The creators are all American companies.
It can be said that the improvement and changes in the regulatory environment have become a major positive factor for XRP to usher in a turnaround. Driven by the overall market trend, the prices of mainstream crypto assets such as Bitcoin and Ethereum have risen, and the crypto market has entered a new bull market cycle. As one of the established crypto assets with the highest market value, XRP has naturally become one of the focuses of capital attention.
3) The development potential of Ripple itself
For the past few decades, the global financial payments system has been dominated by traditional bank settlement and payment methods. Although these systems have advantages in terms of stability and security, with the acceleration of globalization and the booming development of e-commerce, traditional payment systems have gradually exposed many problems: high transaction fees, slow payment processing speeds, and cross-border The complexity and high cost of payments have become bottlenecks limiting global financial liquidity and market development.
The XRP and XRP Ledger (decentralized ledger) launched by Ripple are different from Bitcoin and Ethereum which rely on Proof of Work (PoW) or Proof of Stake (PoS). XRP uses the Ripple Protocol Consensus Algorithm (RPCA). This algorithm reaches consensus through a group of independent verification nodes to ensure fast and effective verification of transactions. This allows the XRP network to complete transaction verification within a few seconds, greatly improving the speed of transactions and reducing costs. XRP essentially serves as a bridge currency, enabling efficient and low-cost transactions between different legal currencies. Exchange, providing a smoother path for global payments and cross-border settlements.
With its innovative technical architecture and unique business model, Ripple has become an important force in promoting the innovation of traditional financial payment systems and expanding the Web3 field. It has established in-depth cooperative relationships with more than 100 banks and financial institutions around the world, including well-known institutions such as Santander and Mitsubishi Bank. These cooperations not only enhance Ripple’s influence in the traditional financial field, but also provide more practical application scenarios for XRP. At the same time, Ripple cooperates with platforms such as Archax to actively promote the tokenization of real-world assets (RWA) and assist traditional financial assets to smoothly enter the blockchain ecosystem. In addition, Ripple is also actively deploying in the field of "institutional-level DeFi". By cooperating with platforms such as OpenEden, it invests in tokenized government bonds and other projects, opening up new opportunities for further cooperation with financial institutions.
Therefore, Ripple has actual use value and demand in cross-border payments, liquidity management and other fields.
Recently, asset management companies 21Shares, Bitwise Asset Management and other companies submitted XRP ETF proposals to apply for XRP ETF, further verifying Ripple's strategic advantages in integrating Web3 with traditional finance.
In addition, according to CoinDesk reports, Ripple Labs has injected $25 million into the Fairshake Political Action Committee (PAC) in the encryption industry, aiming to compete for seats on the encryption industry advisory board that Trump plans to establish and influence the 2026 U.S. congressional elections to promote more Friendly crypto regulatory policies. Ripple’s move marks the company’s beginning to use political means to try to reverse its litigation dilemma with the SEC through policy reforms and strive for a more favorable legal and regulatory environment for XRP.
According to a Fox Business report on November 30, the New York Department of Financial Services has hinted to payments company Ripple (closely related to XRP) that it will approve the company’s magical RLUSD stablecoin. If approved, Ripple will be able to legally offer RLUSD to the public.
There are also unconfirmed reports that Elon Musk may invest heavily in Ripple and XRP, which may further add to the excitement in the market. This rumor is still speculation, but it may have played its part in fueling XRP’s bullish momentum.
03. Risk warning
Although XRP has performed well in the recent past, its future trend still needs to be viewed rationally.
1) Centralization problem
The first is that XRP’s initial token allocation is controversial. More than half of XRP’s total supply of 100 billion is controlled by Ripple Labs.
The second is that unlike fully decentralized blockchains such as Bitcoin and Ethereum, Ripple Labs plays a central role in the development, maintenance and support of XRP Ledger. This dependency makes XRP Ledger somewhat subject to the decisions of Ripple Labs.
In addition, Ripple Labs has established partnerships with many traditional financial institutions and central banks, which often have centralized structures.
2) Leverage bubble risk
XRP’s meteoric rise has taken its price to its highest level since 2021. Some analysts warned that the rise may be "leverage-driven," with open interest in XRP derivatives reaching record levels, warning investors to be aware of potential volatility. Because historical patterns show that rapid increases in open interest often lead to sudden market corrections.
3) Confusion between Ripple protocol and XRP
As mentioned earlier, many people completely confuse the large-scale adoption of the Ripple protocol by financial institutions with the large-scale adoption of the XRP asset. The two are compatible but independent of each other, although the Ripple protocol has created a powerful platform for the XRP asset. background, but confusing the two risks misjudgment in the overall assessment.
04. Summary
As one of the pioneers in the blockchain field, XRP has been focusing on cross-border payment scenarios since its launch in 2012. It is favored by financial institutions for its efficiency, low cost and technological innovation. However, in the past 12 years, XRP’s growth path has not been smooth sailing. It has faced pressure from market competition and has been frequently frustrated by regulatory disputes. As a "veteran" in the field of cryptocurrency, can XRP successfully open up an innovative track in the future? Wait for time to test.
(The above content is excerpted and reprinted with the authorization of our partner PANews, original text link | Source: Vernacular Blockchain)
Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.
"The limelight is chasing Bitcoin. Is the skyrocketing XRP a counterattack by financial giants or an illusion?" This article was first published on (Block Guest).
