Blockchain start-up Ripple, whose digital currency has seen huge volatility this year, is investing in a blockchain-focused fund to encourage the next great technology app built using its software.

Ripple, which owns about 60 billion of the 100 billion ripple, or XRP, tokens ever created, said Wednesday that it would invest $25 million of that digital currency into the fund for early-stage investments.

The company's aim is to bankroll "clever" entrepreneurs who can find additional uses for Ripple's blockchain technology, a company representative said Wednesday.

"We want smart people and smart entrepreneurs, who can solve a problem using XRP," Cory Johnson, chief market strategist at Ripple, told CNBC in an interview Wednesday. "There's money sitting there to be used."

As of now, Ripple's technology is mostly applied to real-time transaction settlements for banks. The company has announced partnerships with U.S. money transfer giants MoneyGram and Western Union as well as American Express and Santander.

Johnson compared the potential for Ripple's technology to iPhone software, which ended up facilitating some of the most valuable private start ups in the world.

"When I got my iPhone I did not think the killer app would be Uber, the most valuable private company in the world, or a competitor to Kodak with Instagram," Johnson said. "I don't know what the best use of XRP is going to be, and I hope it's something we can't even think of."

The fund was started by Blockchain Capital, a venture capital firm dedicated to blockchain technology, which underpins cryptocurrencies and records transactions across a distributed network. The original blockchain was used as the foundation for bitcoin.

Ripple's cryptocurrency, which hit a record high of $3.84 in January, has pulled back significantly to around 49 cents as of Wednesday, according to CoinMarketCap.com. It rose nearly 1 percent shortly after Wednesday's announcement.

Ripple's market cap based on the digital currency's price alone is close to $29.4 billion.

"A lot of people are going to develop things using XRP and because it sits on our balance sheet, it will be helpful to us from a valuation standpoint," Johnson said. "If somebody starts the next Uber, or Instagram or Salesforce using XRP, that would be great for us."

This is the first fund Ripple has contributed to but it won't be the last, Johnson said.

The Blockchain Capital contribution was made in XRP, not U.S. dollars. But Johnson said the company is not looking to offload its cryptocurrency, and that $25 million is tiny when compared to the rest of Ripple's balance sheet.

Even if Ripple quadrupled the amount they invested Wednesday, by Johnson's estimates it would take them 150 years to give away $200 million of XRP a year.

"We'd have a longer runway for XRP donations than you and I have on this earth," Johnson said.

Ripple's CEO Brad Garlinghouse has also shown interest in investing in other companies, and told TechCrunch in March that the firm wanted to invest in more start-ups that want to use its cryptocurrency.