Ripple CTO, David Schwartz, made a bold statement recently, arguing that it is only a matter of when, not if, countries adopt decentralized digital assets as reserve currencies. Ripple’s goal for their digital currency, XRP, is to become the preferred choice for cross-border payments. The increasing use of digital assets around the world as alternatives to traditional fiat currencies has led to the emergence of network states. Many investors are now holding digital assets and conducting business transactions without relying on traditional currencies. The high liquidity in the crypto market has instilled trust and made digital assets viable globally.
Schwartz believes that the future of the United States dollar as the world reserve currency is doomed. He argues that every country wants its own fiat currency to be used as a reserve currency to boost its economy. However, the United States has built its economy by lending IOUs to global central banks and continues to print money out of thin air to repay its growing debt burden. In contrast, Schwartz highlights that big banks around the world are unlikely to use payment infrastructure developed by smaller and competitor banks. Therefore, he suggests that Ripple’s XRP has a high chance of being adopted by more financial institutions globally to facilitate cross-border payments.
The recent SEC vs. Ripple ruling, which determined that XRP secondary sales have not violated the Securities Act under the Howey test, provided significant validation for digital assets as alternatives to the US dollar. XRP also has more regulatory clarity compared to other digital assets, except for Bitcoin. Additionally, XRP is cheaper to send than Bitcoin, regardless of network usage. Another advantage of XRP is its environmental friendliness. Ripple has invested over $100 million in the carbon credit market to democratize the industry. Given the growing emphasis on environmentally friendly policies worldwide, XRP has a strong chance of replacing the US dollar as the global reserve currency.
In terms of the market outlook, XRP price has experienced a slight drop of approximately 5.5 percent in the past five days, trading around $0.496 on Thursday. XRP has a market capitalization of about $26 billion and a 24-hour average trading volume of approximately $738 million. With the increasing adoption of digital assets and blockchain technology, Ripple’s XRP is well positioned to facilitate the trillion-dollar cross-border industry.
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