XRP: How It Powers Cross-Border Payments

For many, XRP is best known for its connection to Ripple, high-profile partnerships, and the SEC lawsuit. These, however, are merely the chapters in XRP's history.

To truly understand XRP, it helps to begin with why this asset was created in the first place.

1Getting to Know XRP 

Origin and Purpose

How the XRP ecosystem took shape over time.

Cross-border payments have traditionally been slow, costly, and dependent on intermediary banks and pre-funded accounts in multiple countries. As a result, moving money between currencies has often been slower and more capital-intensive than domestic transfers.

David Schwartz, Jed McCaleb, and Arthur Britto saw this problem, and launched XRP Ledger (XRPL) in 2012 as a response to it. The network was designed to move value quickly between different currencies, with XRP serving as its native digital asset for transferring value and paying transaction fees.

Afterwards, the founders partnered with entrepreneur Chris Larsen to establish OpenCoin, the company that was renamed Ripple in 2015. Ripple places its focus on building payment products and promoting enterprise adoption of the technology.

Understanding the Different Roles of XRP, Ripple, and XRP Ledger

Because XRP, XRP Ledger, and Ripple have been closely associated on headlines since the project's early days, they're often mistaken for the same thing. In reality, the role that each of them play is different.

The relationship between XRP, XRPL, and Ripple.

Making this distinction will help avoid common misconceptions when following XRP-related news. A partnership announced by Ripple, for instance, doesn't necessarily mean the institution is using XRP, since many of Ripple's products don't rely on the token itself.

2Partners Using XRP for Cross-Border Payments

One of the main sources of demand for XRP comes from its role in On-Demand Liquidity (ODL). Instead of requiring payment providers to maintain pre-funded accounts in multiple countries like in the traditional system, ODL uses XRP as a bridge asset to move value between different currencies.

Real-world partners driving XRP adoption.

One of the earliest institutions to adopt this model was Flash Payments. The company partnered with Ripple in 2016 to support faster international transfers across more than 30 countries, while reducing its dependence on traditional correspondent banking.

Adoption expanded in 2020 when Novatti Group announced its partnership with Ripple. Novatti began using XRP to process remittances between Australia and the Philippines through iRemit in 2021, before outlining plans to extend the service into additional Southeast Asian markets.

XRP's payment use case continued to grow that same year with SBI Remit, which launched Japan's first XRP-powered remittance service in partnership with SBI VC Trade and Coins.ph. This service later expanded to Vietnam and Indonesia in 2023.

Together, these partnerships demonstrate how demand for XRP can arise from actual payment activity. That said, utility-driven demand doesn't automatically translate into sustained higher XRP prices. 

During an ODL transaction, XRP is typically held for only a few seconds before being sold into the destination currency. And so, the overall market impact still depends on factors such as transaction volume, available liquidity, and how market participants source and manage XRP.

3XRP Tokenomics

Understanding where the token demand comes from is only part of the picture. Evaluating XRP also requires understanding the supply economics behind the asset itself.

How XRP's fixed supply is managed.

Fixed Maximum Supply

XRP began with its entire 100B supply already created, which simultaneously means XRP can't be mined nor staked.

This fact often causes confusion, since many exchanges advertise products labelled as "XRP staking." In reality, these are typically lending or yield-generating services rather than staking baked into the blockchain itself.

A fixed maximum supply, however, doesn't mean that all XRP is immediately available on the market. Approximately 61 billion XRP are in circulation and available for public trading as of 2026, while the remainder is either locked or otherwise unavailable.

The key question for investors then likely becomes how will the existing supply enter - or exit - circulation. The short answer to this is Ripple's escrow system and XRP's fee-burning mechanism.

Ripple's Escrow System

Since the launch date, the entire 100 billion XRP supply had been allocated among different parties, including a significant portion that went towards Ripple. This allocation is meant for Ripple to support ecosystem development, partnerships, and other initiatives. 

However, such a large supply concentrated in the hand of one company (naturally) raised market concerns about future distributions. If large amounts of XRP entered circulation over a short period, they could very likely put downward pressure on the price.

To address investors' uncertainty, Ripple placed 55 billion XRP from its holdings into escrow in 2017. Instead of allowing those tokens to be moved freely, the escrow system releases them gradually according to a predefined schedule.

Under this arrangement, up to 1 billion XRP is unlocked each month. Ripple can then decide how much of that XRP to use for purposes such as liquidity provision or ecosystem development. Any portion that isn't used is typically placed into a new escrow contract, delaying its release until a future date. 

Because all these movements happen on XRP Ledger, the remaining escrow balance and release activity can be publicly verified on-chain. This practice makes both past, present and future XRP distributions from Ripple transparent to even the average investor.

Transaction Fee Burning

Every transaction on XRP Ledger requires a small fee paid in XRP. Instead of rewarding validators, the network permanently burns that fee. This mechanism exists primarily to discourage spam and malicious activity by making large-scale attacks increasingly expensive.

Since each transaction burns only a tiny amount of XRP, the amount removed under normal network activity is negligible. However, given that burned XRP can never be recovered and no new XRP can ever be created, the total supply would still gradually decrease over time.

Together, the escrow system and fee-burning mechanism determine how XRP's available supply changes over time. Combined with demand, these supply dynamics help explain why XRP's price has evolved differently across market cycles.

4XRP Price History: How Has the Market Valued XRP?

What has driven XRP's price over time.

Looking across these milestones, XRP's price history shows that the asset has been influenced by more than the broader cryptocurrency market cycle alone. Project-specific developments such as Ripple's commercial progress, institutional adoption, exchange liquidity, derivatives activity, and XRP's tokenomics have all shown their influence over the asset's performance.

The most influential of these, however, seems to be the years-long legal dispute that fundamentally changed how the market viewed XRP.

5The XRP SEC Lawsuit

For years, the SEC's lawsuit against Ripple was one of the biggest sources of uncertainty surrounding XRP. Beyond its effect on market sentiment, the case also raised a broader legal question that could influence how cryptocurrencies are regulated in the United States. 

What Was the Lawsuit About?

In December 2020, the SEC sued Ripple Labs, alleging that the company had conducted an unregistered securities offering through certain sales of XRP.

At first glance, this might sound like the lawsuit was trying to determine whether XRP itself was a security. However, that wasn't the central legal question. 

Instead, the court examined whether specific XRP sales by Ripple qualified as investment contracts under U.S. securities law. To answer that question, the court applied the Howey Test - a long-established legal framework used to determine whether a transaction should be treated as an investment contract.

What Was the Outcome?

How the court ruled on different XRP sales.

Different conclusions were reached depending on how XRP was sold.

On the one hand, Ripple's institutional sales were found to violate securities laws. This led to a civil penalty against the company. XRP sales on public exchanges, on the other hand, were not considered securities offerings.

6A Final Word on XRP 

Coinminutes' final goal when writing this article is not to tell you to buy or sell XRP. Rather, we hope to provide you with the information needed to make an informed decision on this asset.

Now that you've somewhat grasped some of the main concepts that define XRP, perhaps a more in-depth look into them is in queue. Or maybe following social sentiment or price moves around this cryptocurrency is more so your cup of tea? 

If those are the kinds of crypto coverage you are looking for, check out our website at https://coinminutes.com/ for more updates.