Cryptocurrency first hit the public eye with the creation of Bitcoin in January 2009. It was a huge milestone, becoming the world’s first decentralized cryptocurrency. At first, Bitcoin was viewed as just another experiment for tech enthusiasts, but now it’s recognized as a way to store value and as an investable asset.

Since then, there have been huge numbers of cryptocurrencies created. I would argue that many are nothing more than just speculative tokens designed to make their creators and early insiders lots of money. However, there are a handful that have real use cases. One of the cryptocurrencies that falls into the latter category is XRP (XRP -1.30%).

XRP was launched in June 2012, but it didn’t officially begin trading on exchanges until August 2013. At the time, it was trading at less than half a penny. Fast forward 12 years, and it’s currently priced at about $2.95 as of the time of this writing. That’s the good news for those who’ve managed to hold for a while. The bad news is that it’s down 23% from its peak, which raises the question: Will it continue to drop?

Image source: Getty Images.

So, what exactly is XRP for?

People have been sending money from one country to another for quite a while. The problem is that these transactions are costly because banks and financial institutions require pre-funded accounts. In many cases, they must rely on relationships with other banks and financial institutions to facilitate them.

A cross-border transaction could have fees of as much as 5% to 7% of the transfer amount, meaning every $100 sent would only be $95 to $93 by the time it reached the recipient. XRP was created with the intention of removing the intermediaries, so cross-border payments could be made directly, quickly, and much more cheaply than by the traditional route.

What XRP has going for it

The best thing XRP has going for it is the expected increase in cross-border payments.

According to FXC Intelligence, non-wholesale payment flows — which include things like consumer transactions, business payments, and remittances — were about $40 trillion in 2024. By 2032, they’re expected to exceed $62 trillion, a 55% increase.

When looking at total global cross-border payments, the total increase is even more dramatic. According to Allied Market Research, the global cross-border payments market was about $206 trillion at the end of 2024, and it’s expected to double to about $414 trillion by 2034.

Of course, there will be many hands in the pot that benefit from this. However, in XRP’s case, its primary purpose aligns perfectly with this expected growth. As one of the few cryptocurrencies with a real-world use case in global payments, this plays to its strength.

Will XRP continue to drop?

The short answer to this questions is that nobody can say for certain (as is the case for any cryptocurrency or stock). XRP isn’t new to large declines. Just this year, it has experienced multiple retreats of more than 20% within a month’s time.

Data source: Google Finance.

Instead of focusing on whether XRP will continue to drop, the better question is whether its current pullback takes away from its long-term cross-border payment proposition. In my opinion, it doesn’t. Now, this doesn’t mean that XRP won’t continue to decline. However, it does mean that if you believe in its long-term potential, you shouldn’t harp too much on the current pullback. It’s not XRP’s first, and it’s a safe bet to say it won’t be its last.

As with any investment (especially cryptocurrencies and stocks), you want to avoid trying to predict how they will move, because that’s bordering on trying to time the market — something no one can do consistently do. If you believe in XRP’s long-term appeal, focus on that and prepare for inevitable volatility.