XRP is the digital asset used by the XRP Ledger (XRPL), a non-blockchain distributed ledger technology (DLT) built to facilitate financial transactions.
Developed by Ripple Labs, XRP was released in 2012 to pay for transaction fees on the XRPL, which is marketed mostly to institutions and governments to transact across borders or even create central bank digital currencies (CBDCs).
Of the 100 billion XRP created, 80% was allocated to Ripple Labs itself to support the development of its technology. The remaining 20% was allocated to the co-founders. Under community scrutiny, Ripple placed most of its allocation in escrow in 2017, with a controlled unlocking of tokens over the years.
Because of this unique arrangement—the vast majority of tokens being owned by one party, placed under escrow—the tokenomics (or token economics) of XRP are quite different than most cryptocurrencies. The supply of XRP is tightly controlled by the escrow/unlocking rules and 1 billion tokens are released from escrow per month. As Ripple receives these tokens, they exert downward pressure on the price through token sales to fundraise for company activities. However, not all of the 1 billion XRP are sold, and the company has historically placed some of their unsold XRP back into escrow, effectively slowing the release of tokens and making them more scarce.
XRP Price Charts
During its history, XRP has been one of the most volatile digital assets within the top 10 cryptocurrencies. Its position among the biggest crypto players is owed at least partially to its long tenure. Though many traders have attempted to use usual price trends (technical analysis) to anticipate its movement to their advantage, external forces such as Ripple’s company decisions and legal battles have made it somewhat unpredictable.
XRP Price and its History
XRP was released in 2012, at the start of a crypto bull market. It saw a 20x appreciation during the course of 2013, from a low around $0.003 up to $.06. The following year brought XRP valuations back to their prior lows, and significant volatility followed. However, in 2017-2018 the price ballooned to more than $3.00, cementing XRP’s place among digital assets. This meteoric rise even displaced Ethereum as #2 to Bitcoin by market cap.
During the price run-up, there was concern among the crypto community that Ripple would be tempted by the large valuation to sell its tokens, thus crashing the price of XRP. In response, the company locked much of its holding in escrow, allowing itself a steady stream of tokens that would unlock monthly to fund its operations.
In November 2020, the US Securities and Exchange Commission (SEC) sued Ripple for $1.3 billion, accusing the company of selling unregistered securities. Although this did not cause prices to fall at the time, XRP’s gains in the ensuing bull market did not reach its prior highs from 2018, while other assets fared better comparatively. A July 2023 ruling partially ruled in favor of Ripple, ensuring at least some stability to the XRP asset and its market.
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Conclusion
XRP is a digital asset that runs the XRP Ledger, created by Ripple Labs to facilitate financial transactions.
Ripple controls the release of XRP to their coffers by using escrow accounts, and the company primarily uses sales of the token to fund its operations.
XRP’s price has faced volatility both from usual crypto market forces as well as Ripple’s legal challenges.