Recent discussions in the crypto market have focused on two primary uses of XRP: in payments and in real-world asset tokenization. The debate over which of these directions has greater transformative power has intensified following a recent tweet from the account All Things XRP.
Established Role of XRP in Payments
XRP has already established itself as an alternative method for conducting international payments, providing near-instant settlements and significantly lower transaction costs compared to the traditional SWIFT system. According to All Things XRP, transactions based on XRP take around three seconds and cost approximately 90% less than equivalent transfers via SWIFT. However, despite high efficiency, the use of XRP for payments suggests that this model leads to a 'steady burn' of XRP, meaning slow and predictable demand for the asset.
Tokenization and New Supply Dynamics
In contrast to payments, tokenization is seen as a more significant catalyst for the growth of XRP's value. The projected market for tokenized real-world assets is expected to reach $19 trillion. The XRP Ledger blockchain is designed to support this process and allows for the tokenization of various asset classes, such as real estate and bonds. Tokenization requires liquidity in XRP and integrates the asset into the development infrastructure, thereby creating what is termed 'real supply pressure' on XRP, potentially allowing for upward price movement due to limited availability.
Tokenization as the Preferred Growth Driver
While XRP has an established role in payments, the perspective presented in the All Things XRP tweet emphasizes that tokenization has greater potential to influence XRP’s valuation. This new model not only uses XRP but locks it up, altering the fundamental dynamics of supply and demand. Ripple's Chief Technology Officer, David Schwartz, also agreed with this perspective, highlighting the potential of tokenization to enhance asset management efficiency.
The discussion surrounding banking payments and real asset tokenization illustrates fierce competition within the XRP ecosystem. Despite successes in payments, tokenization appears to hold more promise for long-term growth, impacting both demand and the value of the asset.
