The Digest: Ripple Is Literally Paying People to Use Its Cryptocurrency

BUYING AND SELLING, BUT NOT SPENDING. In 2013, San Francisco-based cryptocurrency company Ripple began releasing its coin, named XRP. Today, XRP is the third most popular cryptocurrency in terms of market capitalization (an asset’s share of the total crypto market), lagging only behind only bitcoin and ether.

But Ripple has a problem, according to a report by The New York Times: While people will trade XRP, they won’t use it.

I SEE XRP ALL AROUND ME. By use, we mean do anything other than buying or selling as speculative investments. Since you can’t exactly use crypto at your neighborhood grocery store quite yet, Ripple is primarily focused on getting people to use their XRP to conduct international money transfers. If I have US$2,000 that I want to send to my friend in London, I would convert my dollars to XRP, send it to my friend in the UK, who would then convert it to Euros (or whatever currency they want). Ripple has already partnered with banks and other financial institutions to make this happen.

One way to get people to use a currency? Make sure they have a lot of it. And Ripple is making sure people have a lot of XRP by giving it away. In March, Ripple donated $29 million worth of XRP to a charity to buy classroom supplies for U.S. schools. During an appearance on Ellen in May, actor/Ripple investor Ashton Kutcher presented $4 million worth of XRP to The Ellen DeGeneres Wildlife Fund on behalf of Ripple.

Ripple isn’t just donating XRP to charities, though. It’s also rewarding people who use XRP. In October 2017, the company put $300 million in XRP into the RippleNet Accelerator Program, a program designed to reward financial institutions that use XRP. Then, in May, Ripple created Xpring, an initiative that helps fund the development of XRP-focused start-ups.

FLUSH WITH XRP. Ripple can play such a big role in how people use XRP (and how much there is) because of how the coin is generated. While the number of bitcoin transactions determines the number of bitcoins in the world (more transactions = more mining = more bitcoins), all the XRP in the world was simply created in 2013. At that time, Ripple generated 100 billion XRP, keeping 80 percent for itself. This has led to allegations that the company can and has artificially influenced the XRP market, but it also means Ripple has plenty of XRP to throw around.

Now, no one can say for sure whether Ripple’s many initiatives will actually help XRP move from a speculative investment to a often-used asset. But given the bad publicity Ripple has recently faced — including criticism in a U.K. court and a class-action lawsuit in the U.S.— giving millions to charity should help the company improve its public image if nothing else.

READ MORE: Here’s Some Cryptocurrency. Now Please Use It. [The New York Times]

Source link