Cryptocurrency researcher SMQKE tweeted to draw attention to a highlighted excerpt from Ripple's official documentation, which states: "RIPPLE'S BUSINESS MODEL IS BASED ON THE IDEA THAT DEMAND FOR XRP WILL INCREASE ITS PRICE."

The post includes images from Ripple's publication titled "XRP Demand Examined," which outlines the fundamentals behind Ripple's approach to the long-term viability of XRP. This document features clear statements from Ripple Labs supporting SMQKE's assertion.

The referenced page from Ripple's published documents explicitly addresses the sources of XRP demand. Ripple asserts that the fixed supply is 100 billion XRP and emphasizes that no additional XRP can be created under the protocol's rules. In this context, the document outlines how Ripple anticipates that demand for XRP will grow alongside wider adoption of the protocol.

Key Highlights from Ripple's Documentation

The document states, "Ripple Labs' business model is based on the belief that demand for XRP will increase (leading to price increases) if the Ripple protocol is widely adopted." This statement corroborates SMQKE's assertion by highlighting the direct link between demand for XRP and Ripple's strategic expectations for price growth.

This section also clearly distinguishes between types of demand. Ripple emphasizes the importance of "long-term 'organic' demand (as opposed to purely speculative demand)" and notes that for such demand to exist, XRP must "provide certain utility to holders." The document goes on to identify two utility functions: XRP is used for security purposes in the network and as a bridge currency.

The Utility of XRP in Network Security and Bridge Functionality

The document describes how XRP is used to secure the Ripple network by preventing spam and denial-of-service (DoS) attacks. The network charges very small fees in XRP for each transaction and requires a small reserve to prevent abuse.

For example, each account must maintain a reserve of 20 XRP, and small transaction fees—often a fraction of a cent—are permanently destroyed after each transaction. These mechanisms aim to create an economic barrier against network spam through excessive transactions.

Ripple also requires a small reserve for trust lines and transaction orders, further emphasizing XRP's role as a tool to prevent system abuse. Ripple asserts that these utility features contribute to creating organic demand for this asset as they ensure the stability and reliability of the network.

The Significance of the Business Model

The document presented in SMQKE's tweet supports the claim that Ripple's business model inherently relies on growing demand for XRP. This asserts that Ripple sees the success of the protocol and the corresponding increase in demand for XRP as essential factors for the long-term price increase of XRP.

This aligns with Ripple's strategic interest in promoting the adoption of its technology, not just for transaction processing but also as the fundamental driver of demand for XRP. By positioning XRP as both a security mechanism and a bridge currency, Ripple emphasizes the practical utility that they believe will drive this demand.