Driven by hopes that regulatory clarity will finally unlock mass banking adoption, XRP (XRP +2.06%) has exploded this year, surging more than 370% since last October. But despite this incredible performance, a decade from now, I think XRP will be worth far less than investors hope.
CRYPTO: XRP
Key Data Points
Banks can use RippleNet without XRP
The bull thesis has always hinged on the premise that as banks adopt the technology and products of Ripple (the company behind XRP), demand will soar and XRP's price will follow. The problem is that banks don't really need XRP to use Ripple's services.
RippleNet, Ripple's flagship product, delivers speed and cost savings without requiring banks to touch XRP at all. They can stick with traditional currencies and still reap the benefits. While Ripple's ODL product does use XRP as a bridge asset for cross-border transactions, it remains comparatively niche -- adopted mainly by smaller institutions where liquidity really matters, not the major banks that would move the needle.
Image source: Getty Images.
Ripple's stablecoin could hurt XRP's price
Even if ODL adoption accelerates, Ripple's stablecoin ambitions could very well undermine ODL's demand effects. Its stablecoin, RLUSD, could be used as the "bridge asset" in ODL transactions instead of XRP. The company's push for a banking charter and its $200 million acquisition of a stablecoin payment company make me believe this is the direction Ripple is headed.
In 10 years, I expect XRP to be a cautionary tale about mistaking a company's success for its token's value. While XRP's price could gain in the short term, I think its returns will seriously lag the market over time.
