XRPL Labs abandons the term “IOU” for tokens issued on XRP Ledger

XRPL Labs has decided to no longer use the term „IOU“ (recognition of debt) for tokens issued on its ledger, XRP Ledger.

With the use of this term, its users may somehow misunderstand how to optimally use the registry.

Currencies issued are intended for use with gateways

XRPL Labs has decided to no longer use the term “IOU” for tokens issued on the XRP ledger.

On XRP Ledger, all currencies other than XRP can be represented as issued currencies, sometimes referred to as “IOU”, which stands for “IOU”. These are listed in accounting relationships called “trust lines” between addresses.

When shared among multiple addresses from a single center, IOUs of the same currency issued can “spill over” between addresses through the shared center.

Although some tokens do serve as an “IOU”, the Dutch software development company for XRP Ledger believes that using this term may cause its users to misunderstand how to best use the registry.

“So from now on we’ll call them Tokens . Tokens issued on the XRP ledger. When used as Bitstamp and GateHub do (they are a gateway between the world of fiat and XRP Ledger + XRPL Decentralized Exchange); they are indeed tokens issued by “IOU”.
But that’s not the only use case. ”

Understanding the XRP Ledger Ledger

One of the possible reasons behind the company’s argument is the confusion some users have expressed about what exactly an IOU represents. Although they have a symbol and are negotiable, these tokens are in fact only declarations of debt, or as XRP Ledger indicates , mean:

“I authorize you to owe me up to this amount outside of XRP Ledger.”

XRP Ledger also states that the currencies issued are intended for use with gateways and financial institutions that keep assets out of the real world and allow their use within the ledger. He cites one of these gateways, GateHub , as an appropriate case of using tokens issued as “ IOUs ”.

For example, XRPL Labs has stated that it will now designate currencies issued as “tokens”. XRPL Labs developed the XUMM wallet for XRP Ledger.

After regaining fourth place in the market capitalization list on Valentine’s Day, ahead of Polkadot (DOT) and Cardano (ADA), XRP has since lost ground, falling back to sixth place. Meanwhile, DOT and ADA rose 6.3% and 5.3% respectively, while XRP fell almost 2%. The three projects have kept changing places over the past two weeks, remaining below Bitcoin (BTC), Ethereum (ETH) and Tether (USDT).

Ripple has been in the limelight in recent months. Recently, reputable exchanges removed the token from their rating as its price suffered massive increases and then losses. The Securities and Exchange Commission (SEC) lobbied the company over the alleged sale of unregistered securities.