Is the XRP Reserve Fee a Barrier to Adoption? Bitcoin Investor Weighs In

The XRP reserve requirement for native wallets has recently come under scrutiny by prominent figures in the crypto community.

In a Tuesday post on X, Davinci Jeremie, a Bitcoin investor for over a decade, raised questions concerning the cost of opening an XRPL account compared to accounts on rival networks.

XRP Reserve Fee Under Scrutiny

Jeremie himself answered the question, suggesting that it costs 20 XRP to open an XRP account, which is approximately $11 at its current value.

He believes this could be a significant hurdle for some when adopting XRP, especially since blockchain networks like Bitcoin and Ethereum do not require a reserve amount in wallets.

“It first freaked me out when I couldn’t send my XRPs back to a CEX to sell it,” narrated the founder of DogeBella in response to Jeremie’s post.

It is worth clarifying that the XRP Ledger network reduced the minimum operating balance of an XRP wallet to 10 XRP after a unanimous agreement by validators some years ago. However, the existence of this reserve requirement remains a point of concern among critics in the community.

In response to Jeremie’s post, an XRP proponent tried to justify the reserve by explaining that it does not actually “cost” anything to open an XRP wallet.

The commenter noted that the reserved balance is refundable and withdrawable should one choose to close the account or reset the wallet.

The correct answer is it doesn’t cost you anything. XRP is reserved and is returned / sent anywhere (including an exchange) if you close the account or reset the wallet.

— Market Observer (@Market0bserver) August 13, 2024

Justification for 10 XRP Reserve Requirement

Notably, the XRP Ledger community has clarified that the reserve requirement serves to protect the public network from excessive growth due to spam and malicious activity. They aim to ensure the ledger’s growth aligns with real tech advancements.

To achieve this, an account must hold a minimum amount of XRP. However, the XRP reserve is not inactive. Users can utilize it to pay for transaction fees. The XRPL ecosystem urges users to view the 10 XRP reserves as pre-funding an account to cover future transaction fees.

Minimum Operating Balance Seen as a Bullish Factor

Interestingly, some community figures, such as Artur Kirjakulov, CEO of XPMarket.com, have proposed that the minimum operating XRP balance requirement could actually be a bullish factor for XRP.

Kirjakulov’s theory suggests that as more people create wallets, it generates natural demand. He believes that the mandatory reserve fee could create a demand chain that impacts the price of XRP.

This view is influenced by the fact that there are now over 5 million XRP wallets, each requiring a reserve of 10 XRP. This means that a significant number of tokens—50 million XRP—are largely idle, which could affect the market.

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