What is Ripple (XRP) Used For?

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INTRODUCTION

To understand what Ripple (XRP) is used for it is necessary to examine it from what its two component parts are. In this subsection of the Ripple (XRP) Coin Guide let's investigate what Ripple (XRP) is used for from both the prospective of Ripple (XRP) as a cryptocurrency, and, the prospective of Ripple (XRP) as a digital payment network for financial transactions.

RIPPLE (XRP) AS A CRYPTOCURRENCY

XRP is a cryptocurrency token designed to migrate transactions from central databases controlled by financial institutions to a more open infrastructure while significantly cutting costs. XRP transactions are trustless, instant and cheap, putting them at an advantage for cross-border movements.

[Cointelegraph. What is XRP? And what does it have to do with Ripple?. (Accessed November 3, 2021).

The XRP coin may be purchased, sold, traded or hodled by investors in the same manner as any other cryptocurrency. Yield Farming and Liquidity Pools are alternative investment means for the XRP coin. The XRP coin may be utilized on chain for any relevant purpose the same way as any other cryptocurrency.

But here the lines begin to blur. You see, while XRP has stand alone investment uses for investors, the coin also finds further utility in the other products offered by Ripple Labs. While in essence both utilities are separate and distinct, the commercial utilization of the coin in Ripple Lab's products add value to the token on the investment level.

USE OF XRP IN THE DIGITAL PAYMENT ENTERPRISE

...XRP’s involvement in the market relies on a for-profit company called Ripple, which to this day acts as the main player in the XRP ecosystem. Ripple helps maintain the XRP Ledger and plays a pivotal role in its development while being a significant XRP token holder.

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XRP serves as bridge currency to other cryptocurrencies or even fiat. The XRP coin displays no preference for one fiat or cryptocurrency over another so within the enterprise system any currency is easily able to be exchanged for another currency.

The Ripple enterprise was created for the purpose of increasing the use cases for the XRP coin. All XRP products have now been combined by the Company into what is known as RippleNet. "RippleNet offers connections to hundreds of financial institutions around the world via a single API and makes moving money faster, cheaper and more reliable for you and your customers. It also helps you reduce, even eliminate, the need to pre-fund accounts with On-Demand Liquidity (ODL)—a service that uses the digital asset XRP to source liquidity during cross-border transactions, as an alternative to traditional systems." [Ripple. The Financial Network of the Future. (Accessed November 3, 2021)].

In light of the foregoing it is easy to see why many people use 'XRP' and 'Ripple' interchangeably. However, in adamantly stressing that 'XRP' and 'Ripple' are separate entities, the company emphasizes its involvement with XRP as follows:

Ripple is focused on building technology to help unleash new utility for XRP and transform global payments. Third parties are also pursuing other XRP-related use cases.

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CONCLUSION

Hopefully this article has cleared the blur of the two use cases for the XRP token and the investor/enterprise distinction is now understood. Although XRP is available for individual investor speculation, the Company stresses that the main use of the XRP coin is for financial transactions by financial institutions. Unfortunately, the official documentation presented by Ripple does little in the way of explaining this distinction it stresses.

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