Ripple's New Official Document: Demand for XRP Will Rise

The cryptocurrency researcher SMQKE posted a tweet to draw attention to a highlighted excerpt from Ripple's official documentation, which states: "THE BUSINESS MODEL OF RIPPLE IS BASED ON THE IDEA THAT DEMAND FOR XRP WILL INCREASE ITS PRICE." The post includes images from Ripple's publication titled "XRP Demand Examined" (XRP Demand Examined), which outlines the fundamentals behind Ripple's approach to the long-term viability of XRP. This document includes clear statements from Ripple Labs supporting SMQKE's claims. The page referenced comes from published documents of Ripple and clearly mentions the sources of XRP demand. Ripple asserts that the fixed supply is 100 billion XRP and emphasizes that no additional XRP can be created according to the rules of the protocol. In this context, the document outlines how Ripple predicts that the demand for XRP will grow alongside the broader adoption of the protocol. Key Highlights from the Ripple Document The document states, "The business model of Ripple Labs is based on the belief that the demand for XRP will increase ( leading to a price increase ) if the Ripple protocol is widely adopted." This statement confirms SMQKE's assertion by clearly outlining the direct relationship between the demand for XRP and Ripple's strategic expectations for price growth. This section also clearly distinguishes between different types of demand. Ripple emphasizes the importance of "long-term 'organic' demand as opposed to purely speculative demand", and notes that for such demand to exist, XRP must "provide certain utility to holders." The document continues to define two utility functions: XRP is used for security purposes in the network and as a bridge currency.

The Benefits of XRP in Network Security and Bridge Functionality The document describes how XRP is used to secure the Ripple network by preventing spam and denial-of-service attacks (DoS). The network charges a very small fee in XRP for each transaction and requires a small reserve to prevent abuse. For example, each account must maintain a reserve of 20 XRP, and small transaction fees - usually a fraction of a cent - will be permanently destroyed after each payment. These mechanisms are designed to create an economic barrier against spamming the network with excessive transactions. Ripple also requires a small reserve for trust lines and transactions, further emphasizing the role of XRP as a tool to prevent system abuse. Ripple asserts that these utility features contribute to the organic demand for this asset as they ensure the stability and reliability of the network. The Meaning of the Business Model The document presented in SMQKE's tweet supports the claim that Ripple's business model is fundamentally dependent on the increasing demand for XRP. This affirms that Ripple views the success of the protocol and the corresponding rise in demand for XRP as essential factors for the long-term price increase of XRP. This aligns with Ripple's strategic interests in promoting the adoption of its technology, not only for transaction processing but also as the fundamental driver behind the demand for XRP. By shaping XRP as both a security mechanism and a bridge currency, Ripple emphasizes the practical utility that they believe will drive this demand.