$XRP just flipped $ETH in FDV. Despite its prominence, few understand what Ripple actually does. Is it a massive scam? If not, why are its real users nearly invisible in our daily lives? What is the true scale of Ripple’s business, and does it justify its current valuation?

This article breaks down Ripple’s business logic and addresses its challenges and controversies — from its cross-border payment innovations to $XRP’s core role as a bridge currency — helping us understand how this industry has merged populist appeal with financial innovation and technological premium.

What is Ripple’s Core Business Model?

Ripple operates in the cross-border payment industry.

Global cross-border B2B transactions still rely primarily on SWIFT, a cooperative organization established in 1973 by banks and financial institutions. SWIFT standardizes international payments and related communications, including AML compliance checks. In essence, SWIFT serves as the financial information massaging layer for global cross-border payments — it doesn’t actually handle money.

Within SWIFT, there is a correspondent banking system. In this system, banks are the main participants, conducting cross-border payments through correspondent banks — international partner banks that provide local accounts for sending banks. The core process is straightforward: one end’s account is credited in local currency while the other end’s account is debited, thus avoiding physical currency exchange. All communications flow through SWIFT.

This creates three main issues:

1. Long processing times like 2–5 business days,
2. High costs like 4–6% transaction fees,
3. Low transparency.

Crypto is particularly well-suited for handling fund transfers and settlements.

Let’s examine the stablecoin solution: Local OTC/payment companies receive foreign currency like BRI and convert it to USD through banks. They then work with OTC providers like Cumberland to convert USD to USDT. After USDT transfers occur on-chain, the receiving end converts USDT back to USD through OTC, then to local currency like THB through banks. While USDT transfer and settlement is straightforward, the real challenge and competitive advantage lies in the OTC network.

The diagram below shows an example flow. The red box in the diagram represents the key to the entire stablecoin cross-border payment system — having OTC providers that can offer USDT on/off ramps at any time. They tie up significant capital, making this the “most expensive” part of cross-border payments, which is precisely where Tether’s moat lies. This is what I mentioned in “Consensus from the Cracks: Tether and the New Global Monetary System”: various channels and exchange platforms have become Tether’s workers, helping expand its network globally.

Ripple offers a simpler solution than stablecoins: buyer’s currency is converted to $XRP through local banks or payment companies using CEX, $XRP is transferred to the receiving country’s CEX, and then converted to local currency. In essence, Ripple uses $XRP as a bridge currency to create a streamlined foreign exchange market.

Ripple offers an ingeniously efficient cross-border payment solution. Traditional SWIFT and stablecoin systems face a major challenge: capital sunk has always been a pain point. Banks and OTC providers must deposit substantial funds in advance to facilitate currency exchanges. With stablecoins, for instance, banks need USD reserves while OTC providers must maintain USDT reserves. This pre-funding approach is both unwieldy and capital-inefficient. However, Ripple’s advantage lies in its clever use of CEX liquidity mechanisms, avoiding the pain point of cash pre-positioning. By enabling direct asset exchange on CEX, they’ve created what’s known as On-Demand Liquidity.

What is the Key to Building This New Forex Market?

Ripple is doing more than running a conventional business — it’s pioneering a revolutionary cross-border remittance model. Each region has its own regulatory environment and trading frameworks, and Ripple is working to transform this market single-handedly.

Two key elements drive Ripple’s development path:

1. Bank Partnerships: Getting banks to adopt the $XRP cross-border payment solution.
2. $XRP Liquidity in CEX: Ensuring sufficient liquidity in $XRP trading markets across regions to support global currency exchange.

Ripple has made extensive efforts to achieve these objectives.

Regarding bank partnerships: Prior to 2017, Ripple concentrated on replacing SWIFT by leveraging its messaging layer capabilities to partner with banks and foster market education. This approach successfully converted major banks into strategic partners across regions. Key partnerships included SBI Holdings, which acquired 10.5% of Ripple’s shares for $55 million in September 2016, and SCB (Siam Commercial Bank) later that year. In 2017, Cuallix became the first financial institution to promote $XRP. The pandemic period saw significant expansion in the use of $XRP as a bridge currency.

This explains why Ripple use cases aren’t readily visible — the cross-border payment solution works behind the scenes through banking channels. Neither merchants nor payment recipients need to know which payment route their banks choose. Banks can maintain the entire business model by routing just a portion of their transactions through Ripple.

To ensure market liquidity, Ripple has built an extensive global CEX network that provides $XRP with robust trading capabilities — offering 24/7 availability, minimal slippage, and seamless transactions. In 2019, Ripple invested in Mexico’s first CEX, Bitso, and expanded into Brazil and Argentina. The Philippines’ leading exchange Coins.ph became Ripple’s Preferred CEX for $XRP payments, further solidifying its market presence.

At its core, Ripple is driven by business development. Their LinkedIn profile showcases extensive BD and Marketing teams staffed with professionals from elite consulting and investment banking firms — operating at a level that most competitors simply cannot match.

How Successful Is Ripple’s Business?

In 2023, global cross-border payment volume reached approximately $190 trillion. By comparison, Ripple’s total cross-border transaction volume stands at about 35 million transactions worth $70 billion — a tiny fraction of global cross-border payments.

For perspective, I interviewed a Latin American local OTC dealer whose single trading desk handles $1–1.5 billion in annual cross-border transactions. This comparison underscores how Ripple’s transaction scale remains modest compared to stablecoin payment volumes.

Cross-border payment fees in the industry typically range from 1–2%. Given these rates, Ripple’s business revenue alone wouldn’t be sufficient for profitability.

Moreover, Ripple had to offer substantial incentives to attract early network participants. For instance, in a single quarter of 2020, Ripple paid $15 million in subsidies to MoneyGram, the world’s second-largest remittance company at the time, to encourage adoption of the Ripple network.

Ripple’s Next Steps: Custody and Stablecoin Expansion

Unlike Tether, which leverages USD’s global liquidity and reinforces USD dominance, Ripple’s ecosystem depends entirely on its self-built networks and alliances for maintenance. This creates an obvious bottleneck in the payment business. To address this, Ripple has strategically expanded into three business lines — Payment, Custody, and Stablecoin — building on its strengths with enterprise clients.

• In May 2023, Ripple acquired Swiss custody institution Metaco for $250 million.
• In June 2024, Ripple acquired Standard Custody, which holds nearly 40 currency payment-related licenses in the US, a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS), and Virtual Asset Service Provider (VASP) registration from the Central Bank of Ireland. Its CEO Jack McDonald serves as Ripple’s Senior Vice President of Stablecoins, effectively paving the way for Ripple to issue stablecoins.
• In December 2024, Ripple officially issued RLUSD stablecoin, receiving approval from the New York Department of Financial Services (NYDFS).

At this point, we could still regard Ripple as a tranditional fintech company with three distinct business lines.

How Has Crypto Benefited Ripple?

If the business itself isn’t highly profitable, how does Ripple generate revenue? The answer is straightforward: TOKEN SALES

Ripple’s protracted SEC litigation stemmed directly from these token sales. The SEC charged Ripple with selling over $1.3 billion worth of $XRP to 1,278 institutions to fund company operations. The SEC classified $XRP as an unregistered security, alleging violations of federal securities laws, and sought up to $2 billion in penalties. In August 2023, the court ultimately fined Ripple approximately $125 million, though the judge noted potential regulatory concerns with its “On-Demand Liquidity” service.

How can Ripple sell tokens in such large quantities?

As mentioned earlier, On-Demand Liquidity (ODL) is central to Ripple’s cross-border payment solution. With guaranteed $XRP liquidity, parties can conduct exchanges through $XRP without pre-funding. This ODL system provides Ripple — $XRP’s largest holder — with continuous liquidity support for monetization. Furthermore, $XRP’s role as a bridge currency for cross-border payments suggests it should be classified as a currency rather than a security.

ODL represents a brilliant three-birds-with-one-stone strategy in Ripple’s business model.

The Rise of Sophisticated Financial Populism

Ripple’s business model has evolved from being product-driven to capital-driven, ultimately becoming a “market consensus-driven” profit model. This shift explains why Ripple is often considered a blue-chip meme coin that primarily responds to policy changes.

Ripple’s business strategy represents a sophisticated “financial populism experiment.” The company appeals to mainstream financial institutions by solving cross-border payment problems while leveraging retail crypto investors’ sentiment to boost its strategic position. This approach has moved Ripple away from the traditional “business-driven profit” model of fintech companies into a higher-stakes arena where market narratives and capital dynamics reign supreme.

Though it’s unclear whether Ripple’s team originally intended to raise capital for innovating the industry or used their viable product as a means for capital arbitrage, their masterful handling of financial populism is undeniable.

In financial markets, especially within the speculative crypto space, there’s often a disconnect between actual value creation and perceived value. “Market consensus” can itself become a viable business model — as Ripple clearly demonstrates. The company masterfully balances traditional fintech’s product-driven revenue with crypto market dynamics, navigating compliant financial systems.

Is Ripple creating real value or merely fostering market belief? This question strikes at the heart of sophisticated financial populism, where these two aspects become increasingly indistinguishable.