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Ripple’s native cryptocurrency, XRP, has been a standout performer in the crypto market, surging nearly 500% from $0.50 to $2.60 in recent months. Despite this remarkable growth, XRP has come under fire in a video titled “Everything That’s Wrong With XRP,” sparking debate within the crypto community.
Key Criticisms of XRP
The author of this video has outlined three key reasons why XRP might not be a solid investment.
Replacement by Stablecoins: Author argued that XRP’s original role as a bridge currency for cross-border payments has been overshadowed by stablecoins, which offer more stability. Ripple’s recent launch of its stablecoin, RLUSD, has added fuel to this claim.
Ripple’s IPO Plans: The video suggested that Ripple’s plans for an IPO undermine XRP’s relevance, as the company’s stock performance could overshadow the cryptocurrency.
Ripple’s Large XRP Holdings: Ripple currently holds over 38 billion XRP tokens and has been selling them to fund operations. This centralization, according to the author, poses risks to XRP’s long-term value.
Ripple CTO David Schwartz Responds
In response, Ripple CTO David Schwartz took to X to address these criticisms head-on.
I think its first point is completely wrong. It's true that you can use XRP to make payments without holding it, which is good because it means you aren't exposed to its volatility if you don't want to be, it doesn't follow that people won't hold XRP.For one thing, the only…
— David "JoelKatz" Schwartz (@JoelKatz) December 18, 2024
Schwartz dismissed the claim that stablecoins make XRP obsolete. He explained that XRP’s unique role as a bridge currency relies on its liquidity and the ability of holders to buy and sell the token freely. This liquidity ensures that XRP remains a valuable asset for payments.
Furthermore, Schwartz noted that holding XRP can simplify transactions by reducing the number of currency exchanges needed. “If you don’t know which currency you’ll need next, holding XRP makes sense,” he said.
Schwartz also expressed skepticism about predictions regarding XRP’s price movements, highlighting how XRP and Stellar (XLM) often follow similar market trends, driven by broader factors rather than Ripple-specific developments.
Why XRP Still Has Potential
Despite the criticisms, Schwartz supports XRP’s importance in the digital payment ecosystem. For individuals and businesses navigating multiple currencies, holding XRP can streamline operations, making it an efficient choice in a complex financial landscape.
While debates continue, Ripple is looking toward the approval of an XRP ETF. The company has been working closely with financial institutions, and so far, four filings for XRP ETFs have been submitted. These efforts suggest a strong possibility that the proposals could gain approval before 2025.