Despite being an extremely volatile asset, as is this case with all cryptocurrencies, XRP (CRYPTO: XRP) has seen significant price appreciation since its launch. It does, however, trade 84% off its 2018 record high.

As of this writing, XRP carries a market cap of $34.6 billion. But can it rise 29-fold to become a trillion-dollar cryptocurrency by 2040? Here's what investors should know.

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I don't believe it's a stretch to say that almost all cryptocurrencies are a waste of time, money, and effort. In fact, they are probably on their way to eventually becoming worthless, as their creators and developers are simply looking for a way to cash in on a new tech trend.

For any cryptocurrency to have any shot at long-term success and viability, it must figure out how to introduce real-world utility and bring value to people. Here's where XRP is attempting to stand out from the crowd.

XRP is a digital token whose purpose is to facilitate cross-border payment transactions. Imagine someone in the U.S. that wants to send money to a relative in India, for example. They would convert dollars into XRP and send them to the person in India using the XRP blockchain, after which they would be converted to Indian rupees. XRP says it can settle thousands of transactions in seconds, and they cost fractions of a penny. That seems like a winning solution to what is otherwise a slow and expensive process.

According to Migration Data Portal, $857 billion was sent via remittances in 2023. That's a massive dollar sum. However, I'd argue the amount of money flowing between countries among corporations and governments is probably multiples of that, measured in the trillions of dollars. If XRP can somehow capture even just a tiny fraction of the money that moves across borders between all of their stakeholders, demand for the token and its price could rise over time.

XRP is aiming to disrupt financial services. But that doesn't mean it's without any notable risks to its ultimate success. I think investors should be mindful of some downside factors.

This cryptocurrency still faces regulatory uncertainty. While it settled with the Securities and Exchange Commission for a much smaller amount than what was previously proposed, for the accusation that XRP's sales of tokens to institutional investors was against the law, the agency has appealed the decision. It could be a long process before there's a resolution.