Making consumers warm up to cryptocurrency is not easy. Even many corporations are not inclined to experiment with these currencies right now. Ripple is taking a different approach than other cryptocurrencies for broader acceptance. They are literally giving away XRP in an effort to get more people to use it.
The Ripple Distribution Model
Ripple’s native XRP currency is designed for the financial sector. It can facilitate cross-border payments. Banks and service providers can thus reduce overhead costs and offer near-instant settlements. For consumers, this currency can have benefits as well, such as having to pay lower fees and getting money to friends and families quickly.
Ripple aims to get XRP in the hands of as many people as possible. Some of the recent giveaways have attracted a lot of attention. Donating nearly 50 million XRP to a charity helping out schools who struggle financially is one way to go about things. There is also the $4 million XRP donation to Ellen Degeneres’ wildlife fund. Both developments send a clear message to everyone who takes notice.
Giving away such vast sums is easy to explain. Ripple controls 55 billion XRP tokens. Those tokens are kept in time-locked contracts. Every month, one of those contracts expires and frees up capital to either sell to financial service providers or spend otherwise. It is evident some of that funds have been used for both of these contributions. Even so, the recipients are unlikely to use XRP themselves.
Ripple is now literally paying companies to begin using XRP. The San Francisco-based company has launched a fund containing $300 million, called the RippleNet Accelerator Program, to make these payments to companies. The fund contains two key components: one is a program that matches the costs incurred by a business for promoting XRP, and the second program is a rebate that can cover 50 to 300 percent of integration and license fees, based upon volume.
The Spending Conundrum Remains
Distributing XRP is a smart ploy by Ripple. It generates some media buzz and can get more investors excited about this asset. Even so, it still remains a speculative investment first and foremost. Unlike Bitcoin, spending XRP for regular products or services is virtually impossible. This asset was never designed to be used as such either
Giving millions of tokens to charity can help polish the company’s public image. At the same time, it doesn’t offer new consumer-oriented use cases for XRP. An asset designed for banks is mainly designed to be used by those entities. Consumers will reap the rewards from any service powered by XRP and other Ripple technology. Mercury FX is trialing this technology for cheaper cross-border payments.
It is important to keep in mind XRP is not a traditional cryptocurrency. Its underlying technology and governance model is very different from Bitcoin or Ethereum. Ripple’s recently launched $300 million fund to get companies to use XRP will potentially lead to new cases. Additionally, the Xpring software offers XRP-based rewards to developers building software incorporating this asset.
What do you think about Ripple paying companies to give their product a try? Let us know in the comments below.
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