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XRP vs. RLUSD: Can Stablecoins Really Replace XRP’s Utility?

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XRP vs. RLUSD: Can Stablecoins Really Replace XRP's Utility?

Ripple’s Chief Technology Officer, David Schwartz, addressed community concerns about the upcoming stablecoin, Ripple USD (RLUSD). As RLUSD nears its launch, it is currently in beta testing and has already seen millions of tokens minted on both the XRP Ledger (XRPL) and Ethereum.

Community Concerns About RLUSD

Many members of the XRP community worry that RLUSD could replace XRP in critical functions. Recently, an XRP enthusiast raised these concerns directly with Schwartz. This investor suggested that RLUSD might perform up to 70% of XRP’s current functions, particularly in cross-border payments. Consequently, this has led to feelings of uncertainty among community members regarding XRP’s future role.

Schwartz Reassures the Community

In response to these worries, Schwartz emphasized that XRP remains irreplaceable. He pointed out that only XRP can pay transaction fees on the XRPL. Every transaction on the ledger requires using XRP, ensuring its continued necessity. Additionally, every account on the XRPL must hold a minimum amount of XRP as a reserve. This requirement further solidifies XRP’s role within the network.

Moreover, Schwartz highlighted unique properties of XRP. It has no counterparty risk and cannot be frozen. Additionally, it is not subject to jurisdictional limitations. These characteristics provide significant advantages over stablecoins like RLUSD. Furthermore, he mentioned the autobridging feature, which allows XRP to connect liquidity between different assets automatically. This feature enhances its utility beyond mere transaction fees.

Despite these reassurances, Schwartz acknowledged a potential challenge. If a stablecoin like RLUSD outperforms XRP in fulfilling its intended roles, it could reduce XRP’s significance. He stated that competition from stablecoins is a possibility that cannot be ignored.

Discussion on Fees and Scarcity

Another topic arose regarding whether increasing transaction fees could drive up scarcity and enhance XRP’s value. Schwartz clarified that any changes to fees or wallet requirements involve a consensus process within the XRPL ecosystem. He personally opposes raising fees for artificial scarcity. He believes the focus should remain on serving users rather than generating passive gains for holders.

In summary, while RLUSD is set to play a significant role in Ripple’s ecosystem, Schwartz firmly stated that XRP will continue to hold a unique and essential position within it. The community will closely watch ongoing developments in both assets as they unfold.

Read Also: Ripple CTO Addresses Speculation Linking Him to Bitcoin Creator

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