XRP and the business case for Ripple

I wrote a version of this headline—titled “Is Ripple for real?”—six years ago for Fortune. At the time, and on many occasions since, I have pondered that exact question. A big reason for this is that XRP, the token often associated with Ripple, is different than other cryptocurrencies. Unlike other blockchain projects, there has never been any mining or proof-of-stake mechanism. Instead, the XRP founders simply conjured 100 billion of the tokens out of thin air in 2012, and ever since people have been trying to figure out what the stuff is for.

Ripple, meanwhile, has gone through more identities than Madonna. When I first heard of it in 2013, people claimed the XRP ledger was a more versatile version of Bitcoin and that it would render the original cryptocurrency obsolete. Two years later, during the “blockchain not Bitcoin” era, Ripple tried to be besties with the big banks—only to be rudely brushed off when the banks realized they wanted nothing to do with XRP. For its next act, Ripple tried to disrupt the remittance industry—giving large buckets of XRP to Western Union and MoneyGram, only to see the companies sell it all for a quick buck and then leave Ripple high and dry.

Ripple’s ongoing efforts to butter up the banking and corporate world have made the company, and by extension XRP, an object of hostility and derision among the rest of the crypto world. For a long time, it felt like Ripple’s only friend was the XRP Army—a motley collection of loons, hucksters, bots, and fanatics who cheer maniacally whenever the currency is mentioned on Twitter. But in the last two years, something changed. Ripple became popular, even winning over its longtime antagonist, the crypto overlord Ryan Selkis aka TwoBitIdiot.

Much of this change of heart has come about due to Ripple’s decision to go toe-to-toe with the Securities and Exchange Commission in a high-profile court case that challenges what many view as the agency’s arbitrary and overreaching behavior. The enemy of my enemy is my friend and all that. But meanwhile, the company appears to have finally figured out a sustainable business strategy.

I spoke with Ripple President Monica Long this week, and she told me that the last two years have been the best in the company’s history thanks to the growing popularity of its cross-border payment platform, Ripple Net. The platform provides on-demand liquidity (ODL) through a network of market makers that use XRP to facilitate quick payments and settlements. In 2020, Long says ODL was available in three countries, but today the numbers have grown to 40 markets that represent 90% of the world’s forex trade. She explained Ripple has found its sweet spot not with big banks, but with small- and medium-sized ones in far-flung regions that appreciate the lower transaction costs it offers and also have newer and more adaptable tech stacks. The company is now making money by way of transaction fees but also by selling its holding of XRP to clients. Long adds that Ripple has also begun selling a crypto brokerage tool called Liquidity Hub and that it has been investing heavily in making the XRP Ledger more versatile, including by integrating an Ethereum virtual machine option.

All of this is to say that Ripple, more than ever before, has figured out a long-term value proposition for both the company and XRP—and that it may be poised to succeed regardless of how its big court case turns out.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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