Author | Huohuo
Produced by | Bai Hua Blockchain
Since Donald Trump won the US presidential election on November 5, a number of crypto assets led by Bitcoin have been on a strong upward trend, with Ripple's XRP performing even more prominently. According to news on December 2, XRP has surpassed Solana and Tether (USDT) to become the third largest crypto asset by market capitalization, returning to the level before the 2020 SEC VS Ripple lawsuit.
Ripple was once widely regarded as a blockchain technology implementation partner for many global financial crypto institutions, which is also one of the few representative "footprints" of traditional "financial giants" participating in the digital gold, blockchain, and PayFi technology wave. So will this time be a "counterattack" of the financial giants?
01. Development History
Ripple's history can be traced back to 2004, when it was initially created by developer Ryan Fugger as a payment platform called RipplePay. The goal of RipplePay was to enable individuals and businesses to make payments peer-to-peer without bank accounts. Ryan Fugger designed a trust-based credit system, where users could transact or make cross-border payments directly through mutual trust, without relying on intermediaries in the traditional banking system, thereby effectively reducing transaction costs.
In 2011, technicians Jed McCaleb and Chris Larsen took over RipplePay and decided to develop it into a blockchain-based payment system. In 2012, they founded OpenCoin to manage RipplePay, released the decentralized payment network protocol RippleNet and the Token XRP based on the Ripple protocol, and began to promote XRP as a "bridge currency" for cross-border payments. As the business grew, to better promote Ripple technology and the payment network, in 2015 OpenCoin was officially renamed Ripple Labs.
It is worth mentioning that Chris Larsen was a well-known serial entrepreneur in Silicon Valley, and in addition to Ripple, he also founded E-Loan and Prosper, both of which were hugely successful. Jed McCaleb was one of the founders of the early Bitcoin exchange platform Mt. Gox. Although Mt. Gox later went bankrupt due to security vulnerabilities and financial problems, McCaleb's early experience provided him with an in-depth understanding of the crypto market and he accumulated connections and reputation in the industry. Although he later left Ripple, he played a crucial role in its early development, helping Ripple build its core technology and ecosystem. The current CEO, Bradley Garlinghouse, has held senior positions in large companies such as AOL and Yahoo!, and has rich experience in financial technology and blockchain.
Leveraging the background of its founders and early mover advantages, Ripple has received multiple rounds of investment support since its inception, attracting the participation of many well-known venture capital firms, including Andreessen Horowitz, IDG Capital Partners, Valar Ventures, and Lightspeed Venture Partners. These investments provided Ripple with ample funding to drive its technology R&D and market expansion.
In terms of market development, Ripple not only targets ordinary users, but also focuses more on cooperation with traditional financial institutions. By 2013, Ripple not only had some small financial institutions trying to use it, but also had cooperation with large financial institutions. By 2014, Ripple had officially partnered with several cross-border payment companies including IDT Corporation and Earthport, as well as multiple banks and financial institutions globally (such as Western Union, Santander Bank in Spain, and PNC), which changed the traditional cross-border payment model, making global payments more efficient and transparent, and no longer dependent on the foreign exchange market.
It is particularly noteworthy that Ripple Labs has two products: one is the Ripple protocol that many banking institutions have cooperated with and adopted, and the other is the crypto asset XRP. These two concepts are very easily confused, and people often mistakenly think that banks are widely adopting the XRP asset, when in fact the banks are adopting the Ripple protocol, which is just a payment and settlement solution, and XRP is only an optional asset, not a requirement. In general, the Ripple protocol and the XRP project are compatible but independent.
In 2018, Justin Sun also became Ripple's ambassador in the China region, responsible for promoting Ripple and XRP in the Chinese market.
In 2014, Ripple's predecessor company OpenCoin was named one of the "50 Smartest Companies in the World" by MIT Technology Review. Over time, Ripple has continued to strengthen its cooperation with global banks and payment institutions, gradually entering the mainstream financial circle, a trend also reflected in the price of XRP.
When XRP was first issued in 2012, the price was only a few cents. With the launch of the Ripple protocol and cooperation with some financial institutions, the price of XRP gradually increased from 2013 to 2014, reaching a high of about $0.10. At the end of 2017, driven by the bull market in the entire crypto market, XRP experienced its first major surge, especially in December 2017 when the price of XRP broke through $3, making it the third largest crypto asset by market capitalization at the time.
In 2018, with the bursting of the market bubble, the price of XRP fell back to around $0.50, entering a relatively stable period, until 2020 when the US Securities and Exchange Commission (SEC) sued Ripple, accusing it of failing to register XRP as a security, which sparked widespread attention and became an important legal storm in the crypto industry, also having a significant impact on the price of XRP, leading to a decline.
Nevertheless, in 2021, with the overall market rebound and some court victories, the price of XRP once again rose to around $1.80. After entering 2022, due to the continued legal and regulatory challenges and unstable market sentiment, the price of XRP has mostly remained below $0.50. By 2023, Ripple has again achieved partial victories in the litigation, and the market's confidence in XRP has been restored, with the price rising to around $0.90.
But affected by market sentiment, Ripple's business expansion and the progress of legal proceedings, before November 2024, the price of XRP has remained stable between $0.70 and $1.00, far from its peak period.
After the upward trend in November, as of the news on December 2, XRP's market capitalization has surpassed USDT, making it the third largest crypto asset by market capitalization, returning to the level before the SEC VS Ripple lawsuit. So what factors have driven the renewed interest in XRP?
02. Factors Behind the Surge
1) Turning Point in Ripple's Lawsuit with the SEC
The most direct factor in the rise of XRP is the key progress in Ripple's arduous four-year-plus litigation with the SEC.
Because since 2020, the litigation between Ripple and the SEC has been the main obstacle to the rise of the XRP price. On December 22, 2020, the SEC officially sued Ripple and its founders Bradley Garlinghouse and Christian A. Larsen, alleging that Ripple had illegally raised $1.38 billion through the sale of XRP, which was an unregistered security in violation of federal securities laws. Ripple has insisted that its actions were legal and has continued to defend itself in the litigation. Although the litigation is ongoing, under pressure from the SEC, several major trading platforms such as Coinbase and Binance US have announced the delisting of XRP trading during this period.
However, recent case and market developments indicate that the Ripple case is likely to be resolved satisfactorily.
We know that SEC Chairman Gensler's strict regulatory policies have plunged many crypto projects into difficulties, earning him the title of "crypto enemy number one". However, with the news that Gensler will step down in January 2025, the market's expectations for a more friendly regulatory environment have been ignited, and more importantly, this also means that the long-standing legal dispute between Ripple and the SEC is likely to be resolved.
According to a report by Bitcoin.com on December 2, Chris Giancarlo, the former chairman of the U.S. Commodity Futures Trading Commission (CFTC), said that under the leadership of a crypto-friendly government, the SEC may withdraw the lawsuit against Ripple. He believes that the Trump administration may shift towards a more crypto-supportive policy, and the SEC will also re-examine its regulatory stance on crypto assets, including the classification of XRP. Giancarlo also wrote a legal analysis report arguing that XRP should not be treated as a security, and has long advocated for increased regulatory transparency and more lenient treatment of digital assets.
Previously, The Washington Post reported that Trump's advisory team is evaluating multiple candidates, including some officials and financial executives who openly support the crypto industry. It is worth mentioning that Chris Giancarlo is seen as a hot candidate for the "crypto czar" position in the Trump administration.
Undoubtedly, the market is predicting that the new SEC leadership may adopt a more relaxed and supportive attitude towards the crypto industry, which will bring new opportunities for XRP and other projects that have faced regulatory pressure. It can be foreseen that if the new chairman drives policy changes, the Ripple lawsuit may be settled or withdrawn, and the regulatory environment for the entire crypto industry may also change. This will be a major policy boost for projects like Ripple, Binance, and Coinbase that have been suppressed. Under this positive influence, the price of XRP has rebounded strongly, with a single-day increase of over 35%, reaching a new high in nearly three years.
2) The Trump administration is crypto-friendly
The dust has settled on the 2024 U.S. presidential election, and Republican candidate Donald Trump has been elected as the next president. During the campaign, Trump promised to turn the U.S. into the "global capital of cryptocurrencies" and strongly support the crypto industry, as referenced in the previous article: "Breaking News: Trump Wins, Bitcoin Welcomes the Most Crypto-Friendly U.S. Government." This news has brought great confidence to the market, initially driving the price of crypto assets led by Bitcoin to surge, with Bitcoin starting to challenge the $100,000 mark.
Moreover, on November 14, there were reports that President Trump wants to eliminate all capital gains taxes on cryptocurrencies issued by U.S. companies, which would make all profits from ADA, ALGO, HBAR and XRP completely tax-free, as their creators are U.S. companies.
It can be said that the improvement in the regulatory environment has become a major positive factor for XRP to usher in a turnaround. With the overall market trend driving the rise in prices of mainstream crypto assets like Bitcoin and Ethereum, the crypto market has entered a new bull market cycle. As one of the top-ranked legacy crypto assets, XRP has naturally become a focus of capital attention.
3) Ripple's own development potential
For decades, the global financial payment system has been dominated by traditional bank settlement and payment methods. Although these systems have advantages in stability and security, with the acceleration of globalization and the booming development of e-commerce, the traditional payment system has gradually exposed many problems: high transaction fees, slow payment processing speeds, and the complexity and high cost of cross-border payments, which have become bottlenecks restricting global financial liquidity and market development.
Ripple's XRP and XRP Ledger (decentralized ledger), unlike Bitcoin and Ethereum which rely on Proof-of-Work (PoW) or Proof-of-Stake (PoS), use the Ripple Protocol Consensus Algorithm (RPCA). This algorithm reaches consensus through a set of independent validator nodes, ensuring fast and effective transaction verification. This allows the XRP network to complete transaction verification in just a few seconds, greatly improving transaction speed and reducing costs, and XRP itself serves as a bridge currency that can efficiently and inexpensively exchange between different fiat currencies, providing a smoother path for global payments and cross-border settlements.
Ripple, with its innovative technical architecture and unique business model, has become an important force in driving the transformation of the traditional financial payment system and expanding into the Web3 domain. It has established in-depth partnerships with more than 100 banks and financial institutions around the world, including well-known institutions such as Santander Bank and Mitsubishi Bank. These collaborations not only enhance Ripple's influence in the traditional finance sector, but also provide more real-world application scenarios for XRP. At the same time, Ripple is collaborating with platforms like Archax to actively promote the tokenization of real-world assets (RWA), helping traditional financial assets smoothly enter the blockchain ecosystem. In addition, Ripple is also actively deploying in the "institutional-level DeFi" field, cooperating with platforms like OpenEden to invest in projects such as tokenized government bonds, opening up new opportunities for further collaboration with financial institutions.
Therefore, Ripple has actual use value and demand in areas such as cross-border payments and liquidity management.
Recently, asset management companies such as 21Shares and Bitwise Asset Management have submitted XRP ETF proposals, further validating Ripple's strategic advantages in the integration of Web3 and traditional finance.
Furthermore, according to a CoinDesk report, Ripple Labs has invested $25 million in the Fairshake Political Action Committee (PAC) of the crypto industry, aiming to compete for seats on the crypto industry advisory committee planned by the Trump administration and influence the 2026 U.S. congressional elections, in order to promote a more friendly crypto regulatory policy. Ripple's move marks the company's attempt to use political means to try to overturn its litigation with the SEC and secure a more favorable legal and regulatory environment for XRP.
According to a Fox Business report on November 30, the New York Department of Financial Services has hinted to the payment company Ripple (closely related to XRP) that it will approve the company's magical RLUSD stablecoin. If approved, Ripple will be able to legally offer RLUSD to the public.
There are also unconfirmed reports that Elon Musk may heavily invest in Ripple and XRP, which could further fuel the market's bullish momentum. However, this rumor is still speculative, but it may have also contributed to the upward trend of XRP.
03. Risk Warning
Although XRP has performed well recently, its future trend still needs to be viewed rationally.
1) Centralization issue
First, the initial Token distribution of XRP is controversial. More than half of the total supply of 100 billion XRP is controlled by Ripple Labs.
Secondly, unlike the fully decentralized blockchains of Bitcoin and Ethereum, Ripple Labs plays a core role in the development, maintenance and support of the XRP Ledger. This dependence means that the XRP Ledger is to some extent subject to the decisions of Ripple Labs.
In addition, Ripple Labs has established cooperative relationships with many traditional financial institutions and central banks, which typically have centralized structures.
2) Leverage bubble risk
The violent rise of XRP has pushed its price to the highest level since 2021. Some analysts have warned that this rise may be "leverage-driven", with the open interest of XRP derivatives reaching a record high, alerting investors to potential volatility. This is because historical patterns show that the rapid increase in open interest often leads to sudden market adjustments.
3) Confusion between Ripple protocol and XRP
As mentioned earlier, many people completely confuse the large-scale adoption of the Ripple protocol by financial institutions and the large-scale adoption of the XRP asset, although the Ripple protocol provides a powerful background for the XRP asset, the confusion between the two may lead to misjudgments in the overall evaluation.
04. Summary
As one of the pioneers in the blockchain field, XRP has been focusing on the cross-border payment scenario since its launch in 2012, and has been favored by financial institutions for its high efficiency, low cost, and technological innovation. However, in the past 12 years, the growth path of XRP has not been smooth sailing, facing not only the pressure from market competition, but also frequent setbacks due to regulatory controversies. As a "veteran" in the cryptocurrency field, whether XRP can successfully open up an innovative track in the future remains to be seen.
