Software Engineer: Core Purpose of XRP Ledger In Institutional Settlement

A recent post by Vincent Van Code, a respected software engineer and crypto expert, has prompted renewed focus on the purpose of the XRP Ledger (XRPL). Many assume the network was designed for routine consumer transactions, but Van Code’s detailed explanation indicates a different picture that aligns closely with Ripple’s institutional goals.

In his post, he noted that people often believe XRPL is meant "so you can pay for a coffee and the transaction pops up on XRPL." He explained that this perception misses the core function of the ledger. Rather than facilitating hundreds of small purchases each day, XRPL was created for fast, low-cost movement of funds between banks, payment providers, and large financial institutions.

Institutional Efficiency Over Retail Transactions

Van Code emphasized that XRPL’s architecture was "engineered for high-speed, low-cost settlement and liquidity flows between financial institutions." This statement highlights why the network stands out in an industry that often focuses on consumer-level adoption. Its infrastructure supports the volume and velocity necessary for cross-border transactions, rather than the minute processing of everyday retail payments.

To illustrate the concept, Van Code used a hypothetical scenario involving U.S. travelers spending around $18,000 in Japan through card transactions. Instead of recording each of the 200 small purchases individually on the ledger, he described a system where financial institutions handle those internally and later perform one or a few XRPL transactions to balance the day’s liquidity. This approach demonstrates the practical application of XRP as a settlement layer rather than a payment processor for each transaction.

How This Supports XRP’s Role in Global Finance

Van Code’s example captures the appeal of XRP in global settlement. The ability to process a high-value transaction on-chain within seconds and at minimal cost gives financial entities a reliable tool for managing liquidity and foreign exchange conversions. In his explanation, he noted that such settlements might involve converting “USD holdings into a USD-backed stable-coin (e.g., RLUSD) on XRPL, maybe then into XRP and/or into a Japanese-yen stable-token.” This chain of conversion highlights XRP’s utility as a bridge asset, enabling efficient movement between different currencies and stable-value tokens.

Positioning for Real-World Adoption

Van Code concluded that XRPL’s “real strength” lies in “moving big chunks of value quickly and efficiently between institutions.” His remarks help clarify the network’s direction and address misconceptions about its scope. While retail use cases remain possible, the ecosystem’s growth trajectory continues to favor institutional-grade operations.