XRP Needs Utility, Novogratz Reveals

What to Know:

• Mike Novogratz questions the long-term utility of XRP and Cardano (ADA) in a market shifting towards fundamental value.
• XRP and ADA boast strong communities but relatively weak on-chain activity compared to other cryptocurrencies.
• Novogratz suggests tokens will increasingly be valued like traditional businesses based on revenue, usage, and measurable value.

Mike Novogratz, the Founder and CEO of Galaxy Digital, has cast doubt on the long-term viability of XRP and Cardano’s ADA, suggesting they need to demonstrate more than just community support to thrive. In a recent interview, Novogratz highlighted that as the cryptocurrency market matures, tokens will be increasingly valued based on tangible utility and revenue generation, rather than just hype. This shift in focus raises questions about the sustainability of projects like XRP and Cardano, which, according to Novogratz, currently rely heavily on their dedicated communities. The future success of XRP and ADA hinges on their ability to translate community enthusiasm into real-world usage and measurable value.

XRP and Cardano’s Community vs. On-Chain Activity

Novogratz’s comments draw attention to a critical divergence between community strength and actual on-chain activity for XRP and Cardano. While both cryptocurrencies have cultivated loyal and active communities, the data suggests that this enthusiasm hasn’t translated into widespread usage of their respective blockchains. XRP, used by Ripple for cross-border payments, has faced criticism for its relatively low organic activity compared to its multi-billion dollar market capitalization. Similarly, Cardano, led by Charles Hoskinson, has struggled to attract significant usage despite its innovative blockchain technology. This raises a fundamental question: can community support alone sustain a cryptocurrency’s value in the long run? The market is evolving, and investors are increasingly demanding tangible evidence of utility and adoption.

The Maturing Crypto Market and the Shift to Fundamentals

The cryptocurrency market is undergoing a significant transformation. The days of hype-driven rallies and speculative bubbles are gradually fading, replaced by a more discerning investment landscape. Novogratz argues that tokens, excluding those designed as “money” like Bitcoin, will be increasingly evaluated like traditional businesses. This means focusing on key metrics such as revenue, usage, and measurable value. Projects that can demonstrate real-world applications and generate tangible economic activity will be the ones that thrive in the long term. This shift towards fundamentals is driven by institutional investors entering the crypto space, bringing with them a more rigorous approach to due diligence and valuation.

Analyzing XRP’s Role in Cross-Border Payments

Ripple’s XRP token is designed to facilitate fast and low-cost cross-border payments through its RippleNet network. While Ripple has secured partnerships with various banks and fintech companies, the actual usage of XRP for these payments remains a point of contention. Critics argue that the volume of XRP transactions doesn’t justify its substantial market capitalization. The success of XRP hinges on its ability to gain wider adoption among financial institutions and demonstrate its superiority over traditional payment systems. Regulatory clarity will also play a crucial role in XRP’s future. The ongoing legal battle between Ripple and the SEC has created uncertainty and hindered its adoption in the United States.

The Future of Cardano and the Need for Real-World Applications

Cardano, known for its focus on research-driven development and its peer-reviewed approach to blockchain technology, faces a different set of challenges. While Cardano boasts a highly engaged community and a technically sound blockchain, it has struggled to attract a significant number of real-world applications. The platform’s smart contract capabilities have yet to translate into a thriving ecosystem of decentralized applications (dApps). To succeed, Cardano needs to foster greater developer activity and incentivize the creation of innovative and useful dApps. This will require a concerted effort to attract developers, provide them with the necessary tools and resources, and promote the platform’s unique advantages.

Novogratz’s perspective serves as a reminder that the cryptocurrency market is evolving beyond speculation and hype. The long-term success of projects like XRP and Cardano will depend on their ability to demonstrate real-world utility, generate revenue, and attract sustainable adoption. As the market matures, investors will increasingly demand tangible evidence of value creation, favoring projects that can deliver measurable results over those that rely solely on community support.

Related: XRP Signals: Crypto News and Derivatives Data

Source: Original article