Ripple is a blockchain and tech company that provides faster payment solutions for businesses using the XRP Ledger and its native token, XRP. In most cases, XRP is used as a bridge currency for on-demand liquidity outside the U.S.
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A bridge currency gives businesses a common currency to use in international and cross-border financial transactions, similar to the way the U.S. dollar has been used. As of May 31, 2024, Ripple was using Tether (USDT) in the U.S. because it will violate security laws if it sells XRP to institutional customers for liquidity purposes. Ripple's technological approach with the interledger protocol provides connectivity in transactions. XRP ensures liquidity in these cross-border transactions
Key Takeways
Ripple uses XRP as a bridge currency to facilitate international cross-border transactions quickly and efficiently.
Due to regulatory constraints in the U.S., Ripple uses Tether (USDT) instead of XRP for liquidity purposes.
XRP transactions bypass traditional banking infrastructure, offering a faster and more seamless payment experience.
Despite Ripple's innovative approach, it continues facing legal challenges from the SEC over the classification of XRP as a security.
As of 2024, Ripple and the SEC were engaged in a court battle over $2 billion in fines.
