A new document from Ripple confirms the notion that the demand for XRP will influence its value. Researcher SMQKE highlighted this fact in a recent Twitter post, accompanied by information from official company publications.
Key Highlights from the Ripple Document
The document explicitly states, "Ripple Labs’ business model is predicated on a belief that demand for XRP will increase (resulting in price appreciation) if the Ripple protocol becomes widely adopted." This statement confirms SMQKE’s claim by outlining a direct link between XRP demand and Ripple’s strategic expectations of price growth.
XRP’s Utility in Network Security and Bridge Functionality
The document describes how XRP is used to secure the Ripple network by discouraging spam and denial-of-service (DoS) attacks. The network charges tiny fees in XRP for each transaction and requires small reserves to prevent abuse. For example, each account must maintain a reserve of 20 XRP, and small transaction fees—typically fractions of a cent—are permanently destroyed with each payment. These mechanisms serve as an economic barrier against spamming the network.
Implications of the Business Model
The documentation presented in SMQKE’s tweet substantiates the claim that Ripple’s business model inherently depends on the increasing demand for XRP. It confirms that Ripple views the success of its protocol and the corresponding increase in XRP demand as essential for the long-term appreciation of XRP’s price. By framing XRP as both a security mechanism and a bridge currency, Ripple underscores the practical utility it believes will drive this demand.
The insights drawn from the Ripple document emphasize that the increasing demand for XRP is not only important for the company but also critically significant for its long-term price trajectory. Understanding both the functionality of XRP and its place within the growing ecosystem of digital assets is essential.
