XRP News Today: Ripple’s Business Model Depends on XRP Demand Growth

Crypto researcher SMQKE highlighted an excerpt from an official Ripple document, stating that Ripple’s business model is based on the idea that demand for XRP will increase its price. The document, titled “XRP Demand Examined,” outlines Ripple’s approach to XRP’s long-term viability and includes statements from Ripple Labs supporting SMQKE’s assertion.

The document emphasizes the fixed supply of 100 billion XRP, with no additional tokens to be created under the protocol’s rules. Ripple anticipates that demand for XRP will grow as its protocol becomes more widely adopted. The document explicitly states that Ripple Labs’ business model is predicated on the belief that demand for XRP will increase, resulting in price appreciation if the Ripple protocol becomes widely adopted.

Ripple distinguishes between long-term organic demand and purely speculative demand, noting that for organic demand to exist, XRP must provide utility to its holders. The document identifies two utility functions for XRP: it is used for security within the network and as a bridge currency. XRP is used to secure the Ripple network by discouraging spam and denial-of-service (DoS) attacks. The network charges tiny fees in XRP for each transaction and requires small reserves to prevent abuse. Each account must maintain a reserve of 20 XRP, and small transaction fees are permanently destroyed with each payment. These mechanisms create an economic barrier against spamming the network with excessive transactions.

Ripple also requires small reserve amounts for trust lines and working orders, further emphasizing XRP’s function as a deterrent against system abuse. These utility features contribute to organic demand for the asset because they ensure the stability and reliability of the network. The documentation substantiates the claim that Ripple’s business model inherently depends on the increasing demand for XRP. It confirms that Ripple views the success of its protocol and the corresponding increase in XRP demand as essential for the long-term appreciation of XRP’s price. This aligns with Ripple’s strategic interest in fostering adoption of its technology, not solely for transaction processing, but also as a foundational driver of demand for XRP. By framing XRP as both a security mechanism and a bridge currency, Ripple underscores the practical utility it believes will drive this demand.