Source: Vernacular Blockchain

Since Trump won the US presidential election on November 5, a number of crypto assets led by Bitcoin have risen strongly, among which Ripple’s XRP performance more prominent. According to news on December 2, XRP surpassed Solana and Tether (USDT) to become the third largest crypto asset by market value, returning to the level before the 2020 SEC VS Ripple lawsuit.

Ripple was once considered to be the blockchain technology implementation partner of many financial encryption institutions around the world and became famous. This was also the traditional "financial giants" participating in digital gold, blockchain, PayFi One of the rare representative "footprints" of the technological wave, will Ripple be a "counterattack" by financial giants this time?

Ripple’s founding history can be traced back to 2004, when it was originally created by developer Ryan Fugger as a payment platform called RipplePay. RipplePay's goal is to enable individuals and businesses to make payments peer-to-peer without having a bank account. Ryan Fugger designed a credit system based on trust. Users can directly conduct transactions or cross-border payments through mutual trust without relying on intermediaries in the traditional banking system, thus effectively reducing transaction costs.

In 2011, Jed McCaleb and Chris Larsen, who had technical backgrounds, took over RipplePay and decided to develop it into a blockchain-based payment system. Therefore, in 2012, they established OpenCoin to manage RipplePay, released RippleNet and Token XRP, a decentralized payment network protocol based on the Ripple protocol, and began to promote XRP as a "bridge currency" for cross-border payments. With the development of business, in order to better promote Ripple technology and payment network, OpenCoin officially changed its name to Ripple Labs in 2015.

It is worth mentioning that Chris Larsen was once a famous serial entrepreneur in Silicon Valley. In addition to Ripple, he also founded E-Loan and Prosper, both of which achieved great success. Jed McCaleb is one of the founders of the early Bitcoin trading platform Mt. Gox. Although Mt. Gox later collapsed due to security breaches and funding issues, McCaleb’s early experience provided him with a deep understanding of the encryption market and accumulated contacts 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 chief executive officer (CEO) Bradley Garlinghouse has worked at AOL, Yahoo!He serves as a senior executive in large companies and has extensive experience in the fields of financial technology and blockchain.

With its founder’s background and early dividend advantages, Ripple has received multiple rounds of investment support since its establishment, attracting the participation of many well-known venture capital institutions. Investors include Andreessen Horowitz, IDG Capital Partners, Valar Ventures, Lightspeed Venture Partners, etc. These investments provide Ripple with sufficient funds to promote its technology research and development 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 was not only being tried and used by some small financial institutions, but also cooperated by large financial institutions. By 2014, Ripple officially acquired multiple partners, including IDT Corporation, Earthport and other cross-border payment companies, and also cooperated with many banks and financial institutions around the world (such as Western Union, Santander Bank, PNC, etc.) , which changes the traditional cross-border payment model and makes global payments more efficient and transparent, making cross-border payments no longer dependent on the foreign exchange market.

It is particularly important to note that Ripple Labs has two products. One is the Ripple protocol that is cooperated and adopted by many banking institutions we mentioned, and the other is the encrypted asset XRP. These two concepts are easily confused. People often mistakenly believe that banks are adopting XRP assets on a large scale. In fact, the Ripple protocol adopted by banks is only a payment and settlement solution and does not rely on XRP, a crypto asset. The XRP asset will only be an option at the time of adoption. Overall, the two projects, Ripple protocol and XRP, are compatible but independent of each other.

In 2018, Justin Sun also became the ambassador of Ripple in the region, responsible for promoting the promotion and application of Ripple and XRP in the market.

In 2014, Ripple’s predecessor company OpenCoin was also named one of the “50 Smartest Companies in the World” by the MIT Technology Review. As time goes by, Ripple continues to strengthen its cooperation with global banks and payment institutions, and gradually enters the mainstream financial circle. This trend is 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 between 2013 and 2014, reaching a maximum of about $0.10. At the end of 2017, driven by the bull market in the entire crypto market, XRP experienced its first significant rise. Especially in December 2017, the price ofThe third largest crypto asset by value.

In 2018, as the market bubble burst, the XRP price fell back to around $0.50 and entered a relatively stable period until the U.S. Securities and Exchange Commission (SEC) in 2020 A lawsuit was filed against Ripple, accusing it of not registering XRP as a security. The case attracted widespread attention and became an important legal storm in the encryption industry. It also had a significant impact on the price of XRP, causing the price to drop.

Nevertheless, in 2021, as the overall market rebounded and some court cases were won, the XRP price once rebounded to around $1.80. Entering 2022, XRP price has remained below $0.50 for most of the year due to ongoing legal and regulatory challenges and unstable market sentiment. By 2023, Ripple once again achieved partial victory in the lawsuit, market confidence in XRP was restored, and the price rose to around $0.90.

However, affected by multiple factors such as market sentiment, Ripple's business expansion and the progress of legal proceedings, the price of XRP will be stable at US$0.70 to US$1.00 before November 2024. is far from its peak.

After the rising market in November, as of December 2, the market value of XRP surpassed USDT and became the third largest crypto asset by market value, returning to the level before the SEC VS Ripple lawsuit. So what are the factors driving renewed interest in XRP?

1) Turnaround in Ripple’s lawsuit with the SEC

The most direct factor in the rise of XRP stems from the key developments in the more than four years of difficult litigation between Ripple and the SEC. .

Because the lawsuit between Ripple and the SEC has been a major obstacle to XRP price growth since 2020. On December 22, 2020, the SEC formally filed a lawsuit against Ripple and its founders Bradley Garlinghouse and Christian A. Larsen, alleging that since 2013, Ripple and its founders have made approximately US$1.38 billion in profits from the sale of XRP, which is an unspecified currency. Register securities in violation of the registration requirements of the federal securities laws. Ripple maintains that its actions were legal and continues to defend itself in the lawsuit. Although the lawsuit continued, under pressure from the SEC, during this period multiple mainstream trading platforms such as Coinbase and Binance US announced that they would delist XRP trading.

However, recent cases and market developments indicate that the Ripple case is expected to be properly resolved.

We know that SEC Chairman Gensler’s strict supervision in recent years has once put many encryption projects in deep trouble, and he has therefore been called the “enemy of encryption.” 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, it also means that the protracted legal dispute between Ripple and the SEC is expected 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 crypto-friendly leadership, the SEC may drop its lawsuit against Ripple. He believes that Trump may turn to be more pro-crypto, and the SEC will also review its regulatory stance on crypto assets, including its identification of XRP. Giancarlo has also written legal analysis arguing that XRP should not be considered a security and has been an advocate for greater regulatory transparency and looser 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 have publicly supported the encryption industry. It is worth mentioning that Chris Giancarlo is regarded as a favorite candidate for Trump’s “crypto czar” position.

There is no doubt that the market is predicting that the new SEC leaders may adopt a more relaxed and supportive attitude towards the encryption industry, thus bringing new opportunities to XRP and other projects that have been subject to regulatory pressure. It is foreseeable that if the new chairman promotes changes, Ripple's lawsuit may be expected to be settled or withdrawn, and the regulatory environment of the entire encryption industry may also change. This will be a major benefit for previously suppressed projects such as Ripple, Binance, and Coinbase. Under this positive influence, the price of XRP rebounded strongly, with a single-day increase of more than 35%, setting a new high in the past three years.

2) Trump is friendly to the development of encryption

The dust of the 2024 US presidential election has settled, and Republican candidate Donald Trump was elected as the next president. During the campaign, Trump promised to make the United States the "cryptocurrency capital of the world" and strongly supported the crypto industry. This news brought a huge confidence boost to the market and took the lead in promoting the rise in the price of crypto assets led by Bitcoin, making Bitcoin begin to sprint towards the US$100,000 mark.

And on November 14, news broke that President Trump wants to eliminate all capital gains taxes on cryptocurrencies issued by U.S. companies, news that would make ADA, ALGO, HBAR, and XRP All profits are completely tax-free because their creators are U.S. corporations.

It can be said that the improvement and changes in the regulatory environment have become a major positive factor for XRP to usher in a turnaround. Driven by the overall market trend, the prices of mainstream crypto assets such as Bitcoin and Ethereum have risen, and the crypto market has entered a new bull market cycle. As one of the established crypto assets with the highest market value, XRP has naturally become one of the focuses of capital attention.

3) The development potential of Ripple itself

In the past few decadesSince the beginning, the global financial payment system has been dominated by traditional bank settlement and payment methods. Although these systems have advantages in terms of stability and security, with the acceleration of globalization and the booming development of e-commerce, traditional payment systems have gradually exposed many problems: high transaction fees, slow payment processing speeds, and cross-border cross-border The complexity and high cost of payment have become bottlenecks restricting global financial liquidity and market development.

The XRP and XRP Ledger (decentralized ledger) launched by Ripple are different from Bitcoin and Ethereum that rely on Proof of Work (PoW) or Proof of Stake (PoS). XRP uses the Ripple protocol consensus algorithm (RPCA). The algorithm reaches consensus through a set of independent verification nodes, ensuring fast and efficient verification of transactions. This allows the XRP network to complete transaction verification within seconds, greatly improving the speed of transactions and reducing costs. XRP essentially serves as a bridge currency, enabling efficient and low-cost transactions between different legal currencies. exchange, providing a smoother path for global payments and cross-border settlements.

With its innovative technical architecture and unique business model, Ripple has become an important force in promoting the innovation of traditional financial payment systems and expanding the Web3 field. It has established in-depth cooperative relationships with more than 100 banks and financial institutions around the world, including well-known institutions such as Santander Bank and Mitsubishi Bank. These cooperations not only enhance Ripple's influence in the traditional financial field, but also provide more practical application scenarios for XRP. At the same time, Ripple cooperates with platforms such as Archax to actively promote the tokenization of real-world assets (RWA) and help traditional financial assets smoothly enter the blockchain ecosystem. In addition, Ripple is also actively deploying in the field of "institutional-level DeFi". By cooperating with platforms such as OpenEden and investing in tokenized bonds and other projects, it has opened up new opportunities for further cooperation with financial institutions.

Therefore, Ripple has actual use value and demand in cross-border payments, liquidity management and other fields.

Recently, asset management companies 21Shares, Bitwise Asset Management and other companies have submitted XRP ETF proposals to apply for XRP ETF, which further validates Ripple’s strategic advantages in integrating Web3 with traditional finance.

In addition, according to CoinDesk reports, Ripple Labs has injected $25 million into the encryption industry’s Fairshake Action Committee (PAC), aiming to compete for seats on the encryption industry advisory board that Trump plans to establish and influence 2026. U.S. Congressional elections to push for friendlier crypto regulation. This move by Ripple marks the company's beginning to use means to try to reverse its litigation dilemma with the SEC through reforms and fight for more favorable legal and regulatory conditions for XRP.regulatory environment.

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 invest heavily in Ripple and XRP, which may further add to the excitement in the market. This rumor is still speculation, but it may have played a role in driving XRP’s bullish momentum.

Although XRP has performed well in the near future, its future trend still needs to be viewed rationally.

1) Centralization issue

First of all, the initial token distribution of XRP is controversial. More than half of XRP’s total supply of 100 billion is controlled by Ripple Labs.

The second is that unlike fully decentralized blockchains such as Bitcoin and Ethereum, Ripple Labs plays a central role in the development, maintenance and support of XRP Ledger. This dependency makes XRP Ledger somewhat subject to the decisions of Ripple Labs.

In addition, Ripple Labs has established partnerships with many traditional financial institutions and central banks, which usually have centralized structures.

2) Leverage bubble risk

The violent rise of XRP has brought its price to the highest level since 2021. Analysts warned that the rise could be "leverage-driven," with open interest in XRP derivatives reaching record levels, warning investors to be aware of potential volatility. Because historical patterns show that rapid increases in open interest often lead to sudden market corrections.

3) Confusion between the Ripple protocol and XRP

As mentioned above, many people completely confuse the large-scale adoption of the Ripple protocol by financial institutions and the large-scale adoption of XRP assets. The two are compatible but independent of each other. Although the Ripple protocol creates a strong background for the XRP asset, confusing the two may lead to misjudgment in the overall assessment.

As one of the pioneers in the blockchain field, XRP has been focusing on cross-border payment scenarios since its launch in 2012, and has been favored by financial institutions for its efficiency, low cost and technological innovation. . However, in the past 12 years, XRP's growth path has not been smooth sailing. It has faced pressure from market competition and has been frequently frustrated by regulatory disputes. As a "veteran" in the field of cryptocurrency, can XRP successfully open up an innovation track in the future? Wait for time to test.