The XRP (XRP -11.10%) Cryptocurrencies are exploding rapidly these days.

After trading sideways or bearishly for more than three years, the cryptocurrency formerly known as Ripple came to life in November. As of December 17, XRP has gained 396% in six weeks and has climbed the blockchain market rankings. This is now the third-largest name in the crypto market, ranked by total market value. Before this market frenzy began, XRP was in seventh place.

The $3 price point is just 12% away at this point and the 2018 all-time high is $3.84. Is XRP running out of fuel, or is now the right time to jump aboard this red-hot crypto rocket?

How XRP creates lasting value

Sending money to a company or person in another country can be a frustrating experience. Fees are high, the transaction can take several days, and exchange rates can change significantly before the payment is processed. XRP was designed to eliminate these daunting problems and make it easier to transfer cash from one country to another.

XRP is a very functional crypto token. It serves as the cryptocurrency backend of RippleNet, a payment service that can send money from one country to another with minimal fees and fast transaction processing. Banking partners in dozens of countries help exchange money from their local currency and back again, ensuring a smooth, user-friendly money transfer experience for the user.

This cryptocurrency gains value by burning some tokens to charge a very small fee for each transaction. The average cost per transaction fluctuates over time and has been around 0.002 tokens in recent weeks. That’s about half a cent at the current price of XRP.

So XRP becomes a little scarcer and more valuable with every transaction. The token also gains value when new partner banks establish XRP reserves to participate in the RippleNet system, and the token can also skyrocket when people buy and hold XRP as an investment. Additionally, there is no mining process for XRP – Ripple Labs created 100 billion tokens in 2013 and holds almost half of that supply off-market in escrow accounts. The organization can release some of these OTC XRP tokens to get old-fashioned money or hold them back to support the value of the token.

Why XRP is skyrocketing now

Ripple Labs plans to launch an XRP-based stablecoin called Ripple USD. This coin should always have a value of $1, with trading enabled via XRP and Ethereum (ETH -12.39%) Blockchain ledger. Ripple Labs will support this stablecoin with a dollar-based cash reserve, making it an integrated part of the global RippleNet system.

This addition to the XRP ecosystem will make the cross-border payment experience even smoother. It should also inspire new business ideas and financial applications, such as foreign exchange markets and token-based transfers of real-world assets. Your next house or car probably won’t be tied to XRP and Ripple-USD contracts, but the market could be there in five or ten years.

Of course, the impending launch of stablecoins is not the whole story. The price surge began just before the US elections in November, and XRP investors have more reasons than most to be excited about the impending regime change.

Gary Gensler, the Biden-era Securities and Exchange Commission (SEC) chairman, has dragged out his regulatory moves on many cryptocurrency issues. He led the lawsuit against Ripple Labs that has slowed the cryptocurrency in recent years. His likely successor, cryptocurrency lobbyist Paul Atkins, could drop the lawsuit and make other XRP-friendly changes. For example, exchange-traded funds (ETFs) tied to the spot price of XRP are likely to hit the market soon.

Where can XRP go from here?

The XRP system is gaining massive amounts of new users. The number of active XRP accounts rose to an all-time high in early December and they are also conducting more transactions per account.

Therefore, XRP’s price rise makes sense and I see serious long-term value in this helpful crypto token. However, there could be increased volatility on the XRP chart in 2025. The crypto market as a whole is booming, driven by developments last spring Bitcoin Halving, the election results and general increasing awareness of cryptocurrency solutions. XRP should generally benefit from this trend, but other cryptocurrencies could overtake it on the overall value charts.

I still believe that XRP will deliver strong returns in 2025 and continue to rise in the long term. The global cross-border payments market is measured in Hundreds of trillions of dollars per year, and even a tiny fraction of these transactions could turn XRP and Ripple Labs into financial giants.

Just don’t expect a smooth ride to the stars. There will almost certainly be some severe turbulence on this journey, perhaps some painful price corrections along the way. But yes, XRP has the potential to rise well above $3 per token at some point. Buying a few cheap tokens today could serve you well over the years.