Ripple CEO Brad Garlinghouse has explained the factors that drive the value of XRP, pointing to demand, usefulness, and liquidity as key forces that have influenced the value of currencies throughout history.
He made the comments at the Faena Forum event, where he discussed crypto’s role in global finance, including cross-border payments, stablecoins and financial infrastructure.
During the event, someone asked Garlinghouse how XRP’s value relates to activity on the XRP Ledger and why he believes XRP is not a security.
Garlinghouse cited a 2023 ruling by U.S. District Judge Analisa Torres in Ripple’s case against the SEC.
“I can convince you it’s non-security because a federal judge said it’s a non-security,” he said.
Meanwhile, regarding what influences price, Garlinghouse said it’s simply supply and demand. He argued that the value of digital assets depends largely on how much people want them compared with how much is available.
“For all digital assets, price is very simple: supply and demand,” the Ripple CEO said, noting that XRP has a fixed supply.
Ripple’s XRP Strategy Focuses on Trust, Use and Liquidity
Garlinghouse said Ripple focuses on three main things when pushing development that favor XRP: trust, utility, and liquidity.
“At Ripple, we talk about XRP as our North Star,” he said. “We want to drive trust in XRP, utility in XRP, and the velocity, meaning liquidity, of XRP.”
He explained that liquidity is important because assets that are easy to buy and sell are more useful to institutions and other investors.
Garlinghouse said greater utility for payments and other financial services drives institutional adoption and increases demand for XRP.
“If I’m getting more institutions driving more transactions, and it’s more useful, people are going to want to hold it,” he said.
He also emphasized the importance of liquidity during financial stress. Assets that are difficult to buy or sell quickly become less attractive because holders may worry about being unable to convert them easily into another asset.
Ripple Has Invested More Than $1 Billion in XRP Ecosystem Companies
Meanwhile, Garlinghouse also highlighted Ripple’s investments in companies connected to the XRP ecosystem. He said XRP was the second-largest digital asset before the SEC lawsuit and added that Ripple has invested more than $1 billion in other companies in the XRP ecosystem.
According to Garlinghouse’s argument, continued growth in payments and other XRP use cases drives greater network activity and demand for the token.
In simple terms, his argument is that XRP’s value is not determined solely by the number of transactions taking place on the network. Greater use by banks, institutions and other businesses drives demand for XRP and increases the importance of deep liquidity.
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