Ripple is set to incorporate its upcoming stablecoin into the billion-dollar transaction market, aiming to provide users with improved experiences, lower fees, and faster settlements compared to existing options. However, Ripple CTO David Schwartz assures that this development will not eliminate the role of XRP in the ecosystem, as users who find the cryptocurrency most beneficial for payments and transfers will still have access to it.
The introduction of Ripple’s stablecoin has garnered significant attention, with some speculating that it will drive the price of XRP above $10 as the ecosystem becomes a central hub for the multi-trillion-dollar payments market. However, there are concerns that the stablecoin may compete with and diminish the XRP market. In response to these concerns, David Schwartz, Ripple’s Chief Technology Officer, recently shared his perspective.
The upcoming stablecoin will be pegged at a 1:1 ratio with the US dollar, directly competing with Circle’s USDC and Tether’s USDT. Nonetheless, Ripple believes that its extensive network and ten years of experience will give the new token an advantage in the market.
But what will happen to XRP with the introduction of the stablecoin, particularly in the payments and cross-border funds transfer markets? According to Schwartz, it doesn’t have to be a choice between one or the other.
Schwartz addressed concerns raised by an XRP enthusiast regarding the impact of these developments on the token’s future. He emphasized Ripple’s belief in adopting a tailored approach that suits different needs. In his response, Schwartz stated, “The idea is to get people using payment software that *can* settle with XRP. Then there’s no reason for them not to settle with XRP where it works best. It would be kind of silly to try to get people to use a solution where it’s inferior.”
He further explained that Ripple’s approach is to eliminate any barriers to using XRP and ensuring the best possible experience in cases where it is the optimal solution. However, if XRP is not the best option, Ripple does not want to impose it on users who may then have a subpar experience or face unfavorable economics.
While it may seem logical to assume that XRP would not outperform a stablecoin in the context of payments, especially when both rely on the same XRP Ledger for transaction processing, Schwartz offered a different perspective in response to a similar concern. He stated that for cases where the intermediary asset is not held for an extended period, the stablecoin does not necessarily provide any inherent advantage. Factors such as liquidity and the availability of on/off ramps are likely to play a significant role in determining the more suitable option.
Currently, XRP is trading at $0.524, having experienced a 5% increase over the past week. The price has remained relatively stable over the past two days.
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