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Ripple News: XRP Giveaway to Increase Adoption?

Despite the bright promise of a decentralized and transparent financial system that cryptocurrencies bring, there is a key challenge in achieving this future vision: rather than using digital coins for transactions, people are only buying or selling them for speculative investments.

While all coins have faced this problem since their inception, Ripple, a San Francisco-based startup, is trying a new approach to get people to adopt and use its cryptocurrency, XRP; they are giving it away. The idea is that if people have a lot of the currency, they will begin to use it, but we have yet to see how this will play out.

Ripple and the XRP Coin

Ripple is the company that owns the majority of XRP, the third most popular cryptocurrency in terms of market capitalization. Having been on the market for six years now, the coin lags right behind Bitcoin and Ethereum. But there is much more to Ripple than its ownership of a significant cryptocurrency. The goal of Ripple is to create a blockchain infrastructure that serves the financial services industry and reduces transaction costs as well as processing times — particularly in banking.

Banks and other financial institutions using the Ripple blockchain to transfer money quickly are the primary intended users of XRP, especially internationally. Partnerships have already been formed between Ripple and financial institutions and international payment providers to make this a reality. Currently, transferring money back and forth across international borders can involve processing delays that take multiple days, and it can cost organizations incredibly high fees.

Ripple is designed to free the banking industry of these long-time issues. Additionally, transactions that occur on the Ripple network are designed to comply with banking risk, compliance, and privacy requirements by incorporating anti-money laundering (AML) and know-your-customer (KYC) standards into each transaction. Part of Ripple’s service is to perform currency exchanges between any two types of fiat, or different crypto assets. The key behind their ability to deliver this service is liquidity, and that’s where the XRP coin comes into play by providing source liquidity to banks and other payment providers. XRP can handle more transactions per second than other cryptocurrencies at 1,500 transactions per second. Bitcoin has traditionally been able to handle seven transactions per second, giving Ripple the edge as far as adoption on a broad scale for financial transactions of virtual currency.

However, people are not using the currency for anything more than speculative trading. Indeed, the XRP coin does not have much application to the everyday user; it is intended as a transactional coin to support the Ripple blockchain network. Regardless, XRP is not the only cryptocurrency that has not been adopted for anything other than speculative trading; this is a challenge facing all coins today. That is why Ripple has taken an unusual approach toward encouraging wider use of the digital currency — by giving away large sums of its XRP, particularly to charity. And since Ripple owns $30 billion worth of XRP, it has plenty to share in the hopes that this will promote mass adoption.

Giving Money Away: A Smart Strategy?

Most recently, Ripple donated $29 million of its XRP to fund public schools in response to allegedly thousands of requests from teachers on the website DonorsChoose.org. The money is planned to be used to buy classroom materials, accommodating more than 28,000 public school teachers across all 50 states. According to Ripple, the donation is the largest cryptocurrency gift to a single charity thus far.

DonorsChoose.org will liquidate XRP into U.S. dollars within two weeks, while also attempting to avoid affecting the market price of the coin. The policy of the charity is to sell right away, which also applies to donated shares of a company.

XRP is also behind celebrity actor Ashton Kutcher’s donation to the Ellen Degeneres Wildlife Fund, equating to $4 million in the digital currency, and Stephen Colbert’s $29 million donation of XRP to schoolteachers.

Charity, however, is not the only source to which Ripple is handing out its currency; it has also established systems for rewarding people when they use the digital currency. Just this past May, the company created an initiative called Xpring, which helps fund the development of XRP-focused startups by paying developers to build XRP-focused software. Before that, in October 2017, Ripple gave $300 million in XRP for the RippleNet Accelerator Program, which rewards financial institutions that use three Ripple products with XRP. When a business promotes XRP, the cost that it incurs is matched by the program. Also, the program offers a rebate that can cover 50 to 300 percent of the fees for integration and license, depending on volume.

These programs are essential for increasing the use of XRP since, unlike Bitcoin, the digital currency is not designed for regular consumer use and donating to charities will not change that; it will not suddenly alter the nature of XRP and enable consumers to start using it for products or services. XRP is still primarily designed for banks, so creating new programs for which XRP can be used specifically gives the digital currency long-term value. As Asheesh Birla, the head of product at Ripple, explained: “It’s still really, really early days, but we are seeing the vision come to life…I need to make sure it’s in the hands of the right folks.”

What’s Next for Ripple XRP?

According to Mr. Birla’s estimates, the very first companies that will use XRP are likely to be remittance and money-transfer companies — particularly those that need to pay banks to move money for them. XRP offers vital advantages because it lacks most of the fees that come with banks and they can be moved at any time and on any day, whereas banks are closed on weekends and weeknights.

A number of large money-transfer companies are already beginning to take advantage of Ripple’s token by starting pilot programs with XRP, such as MoneyGram and Western Union. Some smaller companies are jumping on the bandwagon as well to give XRP a try, such as Currencies Direct. When moving money between Mexico and the United States, they found XRP to be an equal alternative, or possibly even cheaper, to its usual method. However, the company is not yet planning to integrate XRP into its business because Ripple does not currently offer services to most of the countries where Currencies Direct does their work. As Brian Harris, the company’s chief product officer, explained, “They aren’t in any of the markets where we need them to be yet…It’s a wait-and-see game as to how they are able to build out that network.”

Final Thoughts

Ripple has taken multiple steps forward in getting its currency XRP into as many hands as possible. It will be interesting to see how people respond and whether they adopt the coin for more common use. If Ripple’s plan works, this could be the beginning of a new trend for consumer usage of other digital tokens as well.

If nothing else works out with Ripple’s latest efforts, donating the notable amount of money to philanthropy that it has should at least improve the company’s public image, which has taken a few hits with the recent class-action lawsuit in the U.S. and criticism in a U.K. court. Regardless, standing in third place among all cryptocurrencies, and with a healthy amount of financial backing, Ripple and its XRP coin will be worth keeping an eye on for the foreseeable future.

Article brought to you by MintDice’s 100% provably fair Dice Bitcoin game. Originally posted on MintDice.

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