What is Ripple (XRP)?

Luis Clark
Luis Clark
Luis is a personal finance expert who has been passionate and writing about crypto for more than five years.
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      What is Ripple (XRP)?

      Ripple is a San Francisco based fintech company that provides a digital payment network and protocol that uses blockchain technology to facilitate global financial transactions. The XRP Ledger (XRPL) network offers low transaction fees and fast processing times. Ripple has also partnered with numerous financial institutions (primarily banks) that use its technologies and connect to Ripple’s payment network.

      The Ripple network has a native cryptocurrency called XRP, which is consistently listed as one of the top 10 digital assets by market capitalization.

      The XRP cryptocurrency token was created to move transactions from central databases managed by financial institutions to open platforms while limiting associated costs.

      Who is the Founder?

      The creation of XRP is a bit more complex than other cryptocurrencies because several individuals were responsible for creating the business entities backing it and the technology behind it.

      That said, Jed McCaleb, Chris Larsen, and Arthur Britto (who was particularly helpful in developing the XRP Ledger) are often stated as the founders of XRP.

      Other individuals who were part of its founding days are David Schwartz, the current CTO (Chief Technology Officer) at Ripple, who is responsible for authoring the original Ripple network whitepaper, and Stefan Thomas, a former CTO of the company.

      ripple xrp overview

      How does Ripple (XRP) Work?

      The protocol that enables the use of XRP is the XRP Ledger. The XRP Ledger introduced a new way of handling blockchains, which the creators state is more efficient to conduct transactions.

      For example, with the Bitcoin blockchain, anyone can contribute computing power, secure its software, and validate Bitcoin transactions. But with the XRP Ledger, only just over 150 select network participants can help secure the network and validate transactions. Collectively, these participants are known as the Unique Node List.

      Now, to verify and confirm transactions, the XRP digital currency uses a consensus system that involves numerous, often bank-owned, servers. Also, validators verify the validity of proposed transactions by comparing them to the most current version of the XRP Ledger. For a transaction to be verified it must be accepted by the majority of validators.

      Key Features of Ripple (XRP)


      RippleNet is a decentralized network of banks and payment providers that use Ripple’s distributed financial technology. It uses blockchain technology to help financial institutions with conducting cross-border payments. RippleNet also provides real-time messaging, clearing, and settlement of transactions. The goal of RippleNet is to create a unified global payment system in traditional finance with the XRP network at its core.

      RippleNet is a fast-growing global network that strives to provide secure payment options and already hosts over 120 currency pairs and is available in over 55 countries. It can be used to settle transactions such as remittance payments at low fees.

      Individuals can also use RippleNet to mint and distribute digital currency.

      RippleNet does not need XRP to function. The only part of it that uses XRP as a bridge currency is its on-demand liquidity service. RippleNet’s on-demand liquidity service is an alternative to pre-funding and it is currently available in the EuroZone, the United States, Japan, Australia, the Philippines, Thailand, and Mexico.

      Ripple Xpring

      This is a recent initiative launched by the Ripple network that builds the infrastructure that enables new blockchain projects to grow through partnerships and investments. Xpring is pronounced “Spring”.

      Ripple Xpring was created for projects and companies that use or can come up with use cases for XRP and XRP Ledger outside of cross-border transactions and exchanging currencies.

      The sole objective of Ripple Xpring is to create a community of developers and entrepreneurs who believe that the Ripple consensus Ledger will transform industries.

      Exarpy Wallet

      Exarpy is an XRP web wallet that enables users to receive and transfer funds from a Ripple warm wallet. A minimum of 20 XRP is required to keep the Exarpy wallet active.

      Ripple users can easily send and receive XRP at a low rate. A transaction fee of 0.025 XRP is charged per transaction.

      The Exarpy Wallet provides medium anonymity and personal security. A PIN is attached to each account number and the wallet is secured with 2FA. Data transfers are secured by SSL encryption and the user’s private keys are stored on his device.

      It has a user-friendly interface that enables users to interact directly with the Ripple network. Exarpy currently has no mobile version.

      Weaknesses of Ripple (XRP)

      weakness of ripple xrp

      The major weakness of Ripple is that it appears to be centralized. Many potential investors do not believe XRP is a real cryptocurrency because it goes against the principle of decentralization.

      The primary aim of cryptocurrency is that through their decentralized nature, they take away control from banks and governments, but Ripple doesn’t seem to be doing that. Instead, XRP was specially designed for the banking industry and to solve problems within the industry. According to some investors, this makes XRP more prone to censorship than other cryptocurrencies.

      Another problem is that Ripple Labs owns a massive share of XRP. However, most people overlook the fact that almost the entire amount of Ripple’s XRP holding is locked up in escrow accounts which were designed to secure the XRP Ledger and to safeguard the XRP payment system. Once again, this is against the idea of decentralization in cryptocurrency.

      There is also a large supply of pre-mined XRP and there is still some uncertainty concerning the time frame Ripple intends to release the large quantity of XRP stored in escrow into circulation. This has made tracking the value of XRP hard. Also, if the stored supply is released at the wrong time, it can adversely affect the value of XRP.

      Finally, Ripple has been in a legal battle with the SEC since December 2020, in a lawsuit filed against Ripple, the SEC alleged that Ripple was selling unregistered securities (XRP sales). It stated that since the company decided to release XRP for sale, it should have registered it as a security.

      Even though things seem to be looking good for Ripple right now, the lawsuit has made some investors wary of long-term commitment to the company.

      How is Ripple (XRP) Created?

      In contrast to some other cryptocurrencies like Bitcoin and Ethereum, XRP was pre-mined. This means that the XRP Ledger already created 100 billion units which are to be released to the public periodically. A big benefit here is, that there can never be more than the pre-mined amount of digital currencies available, making XRP scarce over time as a deflationary asset.

      Ripple Labs own a significant portion of the XRP coins in circulation, which acts as an incentive for the company to help the digital asset to grow over time. The other proportion of XRP is kept in reserve to be released at particular intervals into the market via sales.

      The concern with this approach in the crypto space is that a lot of XRP might be released simultaneously, which would dilute the value of the XRP coins already in circulation. However, to alleviate the fears of such uncertainty, Ripple implements various mechanisms like following a predictable release and gaining the trust of users.

      Mining Ripple (XRP)?

      All XRP coins were already pre-mined so they cannot be mined by miners.

      Which Blockchain does Ripple (XRP) Use?

      The XRP cryptocurrency runs on the XRP Ledger blockchain. The blockchain was engineered by Arthur Britto, David Schwartz, and Jeb McCaleb. Britto and McCaleb would go on to be the major founders of Ripple and use XRP to facilitate transactions on the platform. Jed McCaleb also created Stellar Lumens.

      How to Use Ripple (XRP)

      Just like every other cryptocurrency, XRP can be used for transactions or investments. It allows the transfer of value across borders in a quick, reliable, and cost-effective way.

      XRP can be used to exchange currencies on the Ripple platform. If you want to swap euros for US dollars, you can first exchange your Euros for XRP, then use the XRP to purchase US dollars. This method of exchange using XRP is a lot faster and cheaper than using traditional financial institutions like banks or even the Bitcoin network.

      Asides from being used as an intermediary currency, XRP can also be used as an alternative for conventional wire transfers. You can make international transactions in XRP at a more pocket-friendly rate.

      XRP can be used to source on-demand liquidity and reduce the amount required to make global payments in Nostro accounts.

      XRP can also be bought as an investment on a cryptocurrency exchange and held for a certain time frame. In most cases, investors buy XRP when there is a drop in the price and sell it off when there is an increase in the price. While some investors prefer to HODL XRP for just a short while, others can HODL for a longer time frame.

      How to Buy Ripple (XRP)?

      XRP is available for purchase on exchanges like Kraken, Binance, Bitstamp, Huobi Global, eToro, Bithumb, Uphold, Pionex, Bitrue, etc. You can also check CoinMarketCap to see a list of all the exchanges that support XRP.

      Regardless of the exchange, you choose to use, the process of buying XRP is simple.

      The first step in buying XRP is to create an account if you don’t already have one on your preferred exchange.

      Make sure you do your due diligence before choosing an exchange. Ensure that vital aspects like security and trading fees are checked for whichever exchange you choose.

      After creating and verifying your account on your preferred exchange, the next step is to make the purchase.

      You can buy XRP with either fiat currency or with another cryptocurrency. We suggest you use fiat currency as this is a lot faster and easier. Buying XRP with another crypto is quite complex and time-consuming.

      How to Store Ripple (XRP)?

      You can store XRP in different types of wallets. A wallet will enable you to store and manage your XRP at your convenience. Below are 3 major types of wallets that you can store XRP on.

      ripple wallet hardware

      Hardware Wallets

      These are the most secure type of wallet for the storage of any type of cryptocurrency. Hardware wallets also known as cold wallets, are hardware devices that support the storage of cryptocurrencies offline. Digital assets can be stored on hardware wallets without being exposed to hacking attacks.

      The fact that hardware wallets are not connected to the internet makes them less susceptible to malicious attacks.

      However, the owner of the wallet must ensure that the recovery phrase is properly stored. Because if it gets into the wrong hands, the thief can unlock the assets stored in the wallet.

      XRP is compatible with hardware wallets like Ledger Nano S and Ledger Nano X. The Trezor hardware wallet does not support XRP.

      Currency Exchange Wallets

      Currency exchange wallets are wallets on digital asset trading platforms. Most exchanges that support the trading of XRP have wallets that support the storage of the same.

      If you are using a currency exchange wallet, you do not need to worry about storing and safeguarding your recovery phrases, the platform will take care of that.

      While this may be a convenient option, you will need to apply some caution. Exchange wallets are not 100% safe. You will need to protect your wallet from theft using a password and two-factor authentication (2FA).

      It is important to note that using passwords and 2FA will only protect your wallet against individual account hacks. If the entire exchange’s backend is attacked, your security will be useless because the hackers will have access to all the wallets on the platform.

      Exchange wallets are ideal for storing small volumes of XRP or XRP that you wish to actively trade. Storing large amounts in exchange wallets is discouraged.

      Mobile or Desktop Wallets

      Desktop wallets are apps or programs downloaded from the internet that support the storage of crypto assets through an interface. Desktop or mobile wallets are hot wallets and are easily accessible but they are not as secure as hardware wallets.

      When choosing a mobile or desktop wallet, you must be cautious to avoid downloading a fake app or an app that is susceptible to viruses and phishing scams.

      One of the best mobile wallets for the entire suit of digital coins and tokens on the XRPL is the XUMM wallet.

      Paper Wallets

      As the name implies, you can store your XRP on paper. With this type of wallet, all you need to do is to write out the details of the private keys to your XRP token on a piece of paper.

      While paper wallets may have some security against online attacks, they have their disadvantages. First paper wallets are not durable and can easily be misplaced.

      Paper wallets also list the wallet’s private keys and recovery passphrases, this grants instant access to whoever has the paper. Also if the paper is lost or stolen, access to the funds in the wallet will be lost forever.

      Best Place to Stake Ripple (XRP)?

      You cannot stake XRP tokens in the traditional sense to earn rewards because it is not a Proof of Stake coin. However, there are a couple of platforms that allow you to lend out your XRP assets to earn interest on them. One such lending and borrowing platform is Nexo.

      What do You need to Know about the Future of Ripple (XRP)?

      The success of the XRP token is largely dependent on the mass adoption of the Ripple and XRP platform in the coming years for cross-border transactions.

      Conclusion: Should You Put Your Money in Ripple (XRP)?

      why choose ripple xrp

      Investing in cryptocurrencies isn’t a game for the faint-hearted and XRP is no exception. But if after personal research you believe that Ripple will be widely accepted as a payment system for financial institutions then XRP could be worth your money.

      Risk in Investing in Ripple (XRP)?

      Ripple (XRP) is a high-risk investment. This means you can lose all your money in the worst-case scenario. So only invest money you’re willing to lose should the coin’s value plummet.

      Our extensive analysis of the different Cryptocurrencies doesn’t stop here. You can also check out our “What is Tomb Finance (TOMB)?” guide to know more about another huge project.


      Most frequent questions and answers

      Rather than utilizing the conventional blockchain mining approach, Ripple uses a consensus mechanism through a group of bank-managed servers to confirm cross-border transactions.

      Ripple is a blockchain-based payment system for financial institutions built to facilitate cross-border transactions with a native cryptocurrency called XRP.

      Ripple transactions take 3 to 5 seconds to settle in the XRP Ledger.

      The company makes money through payment fees, investment profits, interest fees on loans, and by selling XRP tokens.

      Yes, many banks have adopted Ripple’s technology as a cross-border payment network. Ripple is currently partnered with hundreds of financial institutions in over 55 nations.

      Here are only a few of the leading banks that use RippleNet:

      • Bank of America (USA)
      • PNC Bank (USA)
      • Bank of China (China)
      • Mitsubishi UFJ Financial Group (japan)
      • JP Morgan Chase (USA)
      • HSBC (UK)
      • Siam Commercial Bank (Thailand)
      • Santander Bank (Spain)
      • Standard Chartered Bank (UK)
      • Cuallix (Mexico)

      To send funds using Ripple you’ll need to ask the recipient for their destination tag and address.

      Next, copy and paste the aforementioned data into the send section of your exchange or wallet account.

      If your recipient possesses an on-ledger account like the Guarda or Atomic wallet without a destination tag, type 0 in the tag field.

      Lastly, press Send and confirm. The transaction should be processed in a few seconds.

      Yes, Ripple is in a lawsuit. The Ripple versus SEC lawsuit began at the close of 2020 due to a complaint by the Securities and Exchange Commission (SEC), which stated that Ripple carried out an illegal security offering from one of its digital assets. The lawsuit claims that while XRP is known as a security in the crypto space it is not a cryptocurrency.

      No, the Ripple Consensus Protocol cannot function adequately without XRP. However, XRP may still survive should the company tools fail.

      XRP is an excellent remittance network and application of blockchain technology, which offers a many times faster, cheaper and eco-friendlier solution to Bitcoin transactions.

      Could the Ripple network and company be widely accepted internationally? Most definitely.

      The goal of Ripple’s blockchain architecture is to provide financial institutions with low-cost and quick cross-border payments. So Ripple is setting itself up to be an alternative to the present international payments system used by banks (the Society for Worldwide Interbank Financial Telecommunication).

      100 billion XRP tokens, at its launch, were pre-mined and a portion of these coins was distributed to particular people, organizations, and the general public via giveaways and gifts afterward.

      This approach led to worries about the decentralization of the token as only a couple of entities seem to control a huge supply of the released XRPs. However, the XRP Ledger is even more decentralized as the Bitcoin or Ethereum networks since there’s many more validator nodes that confirm transactions.

      XRP transactions can be viewed and tracked in the Balance field of AccountRoot objects. Here is an XRP Ledger documentation that will guide you on how to look up transactions.

      There are several features that makes them different, here are a few:

      • XRP is ultra-fast, cheap and eco-friendly, while Bitcoin transaction confirmations are slow, costly and rely on PoW (mining).
      • XRP is used by banks and other financial institutions. Bitcoin can in no way compete as a payment asset and is now rather determined as a store of value rather than a payment protocol.
      • XRP is a pre-mined digital asset, while Bitcoin has to be be mined.

      Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade or sell cryptocurrency or use any specific exchange. Please do not use this website as investment advice, financial advice or legal advice, and each individual’s needs may vary from that of the author. This post includes affiliate links with our partners who may compensate us. 

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