For many, it can be complicated how Ripple is exactly put together. So you have Ripple Labs, Ripple and XRP. In addition, there are a number of misunderstandings about the products that originate from the Ripple ecosystem. This is exactly how it is.
Ripple Labs is the company that develops the Ripple payment protocol. This protocol is aimed at conducting international transactions between financial institutions. Ripple Labs has two products for this; xCurrent and xRapid.
xCurrent is also seen as an alternative to SWIFT, a network on which banks can send information about international transactions to each other for faster processing. xCurrent is based on the Ripple protocol and ensures even faster processing of international transactions. However, XRP is not used for this. Some therefore claim that XRP is only a way to withdraw money from investors, but this is not true.
XRP is actually used in the xRapid product of Ripple Labs. XRapid is also based on the Ripple protocol, but makes it possible to send money even faster. xRapid converts Fiat currency into XRP, sends it via the Ripple network and then converts it into fiat money.
A common argument against XRP is that it would be too volatile for financial institutions. The fact that XRP is volatile is true, but that also applies to fiat currency. And since XRP transactions are almost direct, the period that a financial institution is exposed to volatility is very short. Or as Forbes explains:
An average xRapid payment takes a few minutes, so the window in which an institution is exposed to volatility is minimal. This short window is made possible by the speed with which XRP can pay on the XRP LEDger that can currently process approximately 1500 transactions per second, with a new ledger being closed every 4 seconds.
The Ripple payment protocol is therefore very attractive for financial institutions. Banks seem more and more interested in the use of cryptocurrency, with recently the news that JP Morgan will launch its own crypto. However, according to some, this is not a suitable solution.