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Inquiries regarding the replicability of XRP often center on open-source code and blockchain forks. However, a recent insight shared by a member of the XRP community sheds light on a more complex aspect.
The commentary emphasizes Ripple’s patented payment framework and highlights how XRP’s true functionality is safeguarded by more than just its network effects and liquidity. Intellectual property plays a crucial role in how XRP facilitates value transfer across financial systems.
XRP’s Legal Protection Through Patents
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A prominent member of the XRP community, known as Wilberforce Theophilus, has highlighted U.S. Patent No. 10,902,416 as a key factor that prevents the replication of XRP by another cryptocurrency. This particular patent outlines a cross-border payment system that employs a digital asset as an intermediary for different currencies and financial institutions.
The focus of this patent is on a comprehensive settlement process that eliminates the requirement for pre-funded accounts, thereby minimizing costs and processing time. It details the method by which liquidity is accessed, exchanged, and settled using XRP, ensuring that no other cryptocurrency can perform this operation without employing XRP.
Further strengthening this legal protection is U.S. Patent No. 11,998,003, which expands on Ripple’s initial designs. This patent ensures advanced interoperability across various ledgers and payment networks, thereby safeguarding the integration of diverse systems into a seamless payment flow that transcends geographical and infrastructural boundaries.
Wilberforce’s explanation underscores the impracticality of replication. Even a project with a fast blockchain cannot duplicate Ripple’s proprietary architecture that connects banks, payment providers, and blockchains, with XRP serving as the settlement medium. This architecture is legally protected, making duplication legally challenging.
Understanding the Difference Between Copying Code and Replicating XRP
The patents discussed represent just a portion of the intellectual property held by Ripple Labs, the parent company of XRP. Presently, Ripple Labs holds approximately 39 patents globally, with 18 of these patents already granted.
On the surface, components of the XRP Ledger are open-source, allowing developers to analyze the code and potentially fork it to create similar networks. This has led to misconceptions that XRP itself can be easily replicated.
While a team can mimic the consensus mechanism, transaction speed, and fee structure, and even issue a new token that appears similar technically, this does not capture the entirety of XRP’s value. XRP’s worth is derived from over a decade of operational reliability, extensive exchange liquidity across various jurisdictions, and its association with Ripple, which has fostered relationships with banks, payment providers, regulators, and institutions over the years.
While the software governs transaction processing on a ledger, it does not encompass the legally protected system employing XRP as a bridge asset between financial institutions. Ripple is actively working to position XRP as this bridge asset, evident in its recent expansion into the Middle East through a partnership with Riyad Bank.
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