Ripple Chief Technology Officer (CTO) David Schwartz has addressed critical questions regarding XRP’s role as the crypto firm looks to replace SWIFT. Schwartz indicated that the altcoin was irreplaceable in the firm’s operations despite the issuance of the RLUSD stablecoin.
Ripple CTO Addresses Questions Regarding XRP
In an X post, Ripple CTO first touched on the question of how the crypto firm has over 300 bank partnerships, but XRP on-chain volume remains low. Schwartz opined that there are several reasons why their clients have preferred to use the altcoin off-chain rather than on-chain. However, he believes that they are close to changing that because institutions are now seeing the benefits of moving on-chain.
The Ripple CTO admitted that XRP’s on-chain volume has been very slow. He noted that even the crypto firm can’t use the XRPL DEX for payments yet because they can’t be sure a terrorist won’t provide the liquidity for payment. Schwartz added that features like permissioned domains will address this issue.
Secondly, the Ripple CTO addressed why XRP is still being used over stablecoins for transfers despite its volatility. He explained that there are use cases where volatility isn’t a minus and is instead a plus. He remarked that generally, the view for most digital assets is that the upside outweighs the downside. As such, as long as one isn’t very risk-averse, Schwartz believes that holding the altcoin is not a disadvantage.
The next question was about the incentive to hold XRP if volatility isn’t an issue, because it is a bridge currency. The Ripple CTO said that a bridge currency only works if someone is holding it, so they can get it precisely when they need it. He suggested that it may be best to hold XRP, which is the current dominant bridge currency, because it should be cheaper to exchange it into whatever they happen to next.
Will XRP Lead Over Stablecoins?
Furthermore, David Schwartz answered whether XRP as a bridge currency will still be necessary when stablecoins cover most pairs in the future. The Ripple CTO answered that if one stablecoin wins, then the altcoin won’t be necessary, as that stablecoin will just serve as the bridge currency.
However, the Ripple CTO opined that one stablecoin can’t win for several reasons. This includes the fact that a stablecoin can only be stable relative to one particular fiat currency and will always have jurisdictional ties. As such, Schwartz believes that it still makes sense to have a bridge asset like XRP in this multi-stablecoin world.
As to why giants like BlackRock would want to use XRP Ledger for tokenization instead of building their own blockchain, the Ripple CTO doesn’t think that will matter as long as there is interoperability and asset portability. He added that multi-chains are a good form of scalability as well.
Meanwhile, on geopolitical risk and why foreign countries would trust a U.S.-based private company payment network, the Ripple CTO clarified that the XRPL is not really U.S.-based. Schwartz further remarked that the network has never discriminated against any particular participant. He also noted that Ripple has separately licensed entities in many jurisdictions for its enterprise payment products, which makes it not restricted to just the U.S.
Featured image from Getty Images, chart from Tradingview.com
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