Ripple’s XRP digital token went up to 3.50 USD this January achieving a peak value. This brought the cryptocurrency much attention and exposed the corporation, its token, marketing strategy, and its usefulness.
The Ripple Protocol
All participating banks in the Ripple protocol are added to a single ledger which makes things faster. The network uses the shortest path for money to follow by determining the trust lines in the network. Because Ripple is based on Blockchain technology, it forms a distributed ledger that keeps the record of transactions. Decentralized ledgers let banks exchange IOUs that will be settled at a future date. While Ripple doesn’t need to be a means of exchange, users are required to pay network. Users must keep 20 tokens in their wallets if they want to carry out transactions.
Why Keep XRP Tokens?
Once you understand Ripple’s protocol, you would see that no matter how broadly adopted it becomes, doesn’t mean that its value will grow proportionally. Its value will increase as its demand grows. Banks who use it as bridge asset to settle business help to grow XRP’s value. However, because the digital token has shown volatility users may not want more risk. Users know that using Ripple in this way ensures that the network works better by reducing costs and boosting transaction speeds. But with these incentives, some feel it is still better sense for them to utilise the a more stable digital currency.
As transactions in the network need fees, the demand for the digital currency will increase as the protocol adoption increases, but this will be a slow process. The Ripple Protocol is a good one since it makes things faster and cheaper for banks. Yes, if users and others do adopt the XRP token things do improve. But are they much less expensive to the point that the additional risk is worth it?