What is Ripple (XRP)?
Ripple is a San Francisco-based fintech company that provides a digital payment network and protocol using blockchain technology to facilitate global financial transactions. The XRP Ledger (XRPL) network offers remarkably low transaction fees and fast processing times compared to traditional banking systems. Ripple has 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 consistently ranks among 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 significantly reducing associated costs.
Who Founded Ripple (XRP)?
Understanding what is Ripple requires knowing its origins. The creation of XRP is more complex than other cryptocurrencies because several individuals were responsible for creating both the business entities and the technology behind it.
Jed McCaleb, Chris Larsen, and Arthur Britto (who was particularly instrumental in developing the XRP Ledger) are generally recognized as the founders of XRP. Other key individuals from its founding days include:
- David Schwartz, the current CTO (Chief Technology Officer) at Ripple, responsible for authoring the original Ripple network whitepaper
- Stefan Thomas, a former CTO of the company
How Does Ripple (XRP) Work?
The protocol that enables the use of XRP is the XRP Ledger. This ledger introduced a new approach to handling blockchains, which the creators claim is more efficient for conducting transactions.
Unlike the Bitcoin blockchain, where anyone can contribute computing power, secure the software, and validate transactions, the XRP Ledger allows only approximately 150 select network participants to help secure the network and validate transactions. These participants are collectively known as the Unique Node List.
To verify and confirm transactions, the XRP digital currency uses a consensus system involving numerous servers (often bank-owned). Validators verify transaction validity 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: The Core of What is Ripple
RippleNet is a decentralized network of banks and payment providers that use Ripple’s distributed financial technology. It employs blockchain technology to help financial institutions conduct cross-chain payments, providing real-time messaging, clearing, and settlement of transactions. RippleNet aims to create a unified global payment system in traditional finance with the XRP network at its core.
This fast-growing global network provides secure payment options and already hosts over 120 currency pairs available in more than 55 countries. It can settle transactions such as remittance payments at remarkably low fees compared to traditional banking systems.
Individuals can also use RippleNet to mint and distribute digital currency. Importantly, RippleNet does not require XRP to function. The only component that uses XRP as a bridge currency is its on-demand liquidity service, currently available in the EuroZone, United States, Japan, Australia, the Philippines, Thailand, and Mexico.
Ripple Xpring
This recent initiative launched by the Ripple network builds infrastructure enabling new blockchain projects to grow through partnerships and investments. Xpring (pronounced “Spring”) was created for projects and companies that use or can develop use cases for XRP and XRP Ledger outside of cross-border transactions and currency exchange.
The sole objective of Ripple Xpring is to create a community of developers and entrepreneurs who believe the Ripple consensus Ledger will transform industries.
Exarpy Wallet
Exarpy is an XRP web wallet enabling 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, with a transaction fee of just 0.025 XRP per transaction.
The Exarpy Wallet provides:
- Medium anonymity and personal security
- PIN protection for each account number
- 2FA security
- SSL encryption for data transfers
- Private keys stored on the user’s device
It features a user-friendly interface allowing direct interaction with the Ripple network, though Exarpy currently has no mobile version.
Limitations of Ripple (XRP)
The major limitation of Ripple is its perceived centralization. Many potential investors question whether XRP is a “real” cryptocurrency because it appears to contradict the principle of decentralization fundamental to what cryptocurrency is.
The primary aim of most cryptocurrencies is to remove control from banks and governments through decentralization, but Ripple seems to take a different approach. XRP was specifically designed for the banking industry to solve problems within that sector. According to some investors, this makes XRP more vulnerable to censorship than other cryptocurrencies.
Another concern is that Ripple Labs owns a substantial share of XRP. However, critics often overlook that most of Ripple’s XRP holdings are locked in escrow accounts designed to secure the XRP Ledger and safeguard the XRP payment system. Nevertheless, this concentration of ownership contradicts the decentralization ideal in cryptocurrency.
There is also a large supply of pre-mined XRP, creating uncertainty about when Ripple intends to release the substantial quantity of XRP stored in escrow into circulation. This has made tracking XRP’s value challenging. If the stored supply is released at an inopportune time, it could adversely affect XRP’s value.
Finally, Ripple has been engaged in a legal battle with the SEC since December 2020. In its lawsuit, the SEC alleged that Ripple was selling unregistered securities (XRP). The SEC claimed that since the company released XRP for sale, it should have registered it as a security. Although the situation appears to be improving for Ripple as of early 2025, the lawsuit has made some investors wary of long-term commitment to the company.
How is Ripple (XRP) Created?
Unlike Bitcoin and Ethereum, XRP was pre-mined, meaning the XRP Ledger already created 100 billion units to be released to the public periodically. A significant benefit 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 owns a significant portion of the XRP coins in circulation, providing an incentive for the company to help the digital asset grow over time. The remaining 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 if a large amount of XRP is released simultaneously, it could dilute the value of XRP coins already in circulation. To alleviate such fears, Ripple implements various mechanisms, including following a predictable release schedule and building user trust.
Mining Ripple (XRP)
All XRP coins were pre-mined, so they cannot be mined by miners, unlike proof-of-work cryptocurrencies.
Which Blockchain Does Ripple (XRP) Use?
The XRP cryptocurrency runs on the XRP Ledger blockchain. This blockchain was engineered by Arthur Britto, David Schwartz, and Jeb McCaleb. Britto and McCaleb would later become 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)
Like other cryptocurrencies, XRP can be used for transactions or investments. It allows value transfer across borders quickly, reliably, and cost-effectively.
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 exchange method using XRP is significantly faster and cheaper than using traditional financial institutions like banks or even the Bitcoin network.
Besides serving as an intermediary currency, XRP can also substitute for conventional wire transfers. You can make international transactions in XRP at more cost-effective rates than traditional methods.
XRP can be used to:
- Source on-demand liquidity
- Reduce the amount required for global payments in Nostro accounts
- Be purchased as an investment on cryptocurrency exchanges and held for a certain period
In most cases, investors buy XRP during price dips and sell when prices increase. While some investors prefer to HODL XRP for just a short while, others may hold for longer timeframes.
How to Buy Ripple (XRP)
XRP is available for purchase on exchanges like Kraken, Binance, Bitstamp, HTX (Huobi), eToro, Bithumb, Uphold, Pionex, Bitrue, and others. You can check CoinMarketCap to see a complete list of exchanges supporting XRP.
Regardless of which exchange you choose, the process of buying XRP is straightforward:
- Create an account if you don’t already have one on your preferred exchange.
- Perform due diligence before choosing an exchange. Ensure vital aspects like security and trading fees are suitable for your needs.
- After creating and verifying your account, make the purchase.
You can buy XRP with either fiat currency or another cryptocurrency. Using fiat currency is typically faster and easier. Buying XRP with another crypto can be more complex and time-consuming.
How to Store Ripple (XRP)
You can store XRP in different types of wallets. A wallet enables you to store and manage your XRP conveniently. Below are three major wallet types for storing XRP.
Hardware Wallets
These are the most secure wallets for storing any cryptocurrency. Hardware wallets, also known as cold wallets, are physical devices that support offline cryptocurrency storage. Digital assets stored on hardware wallets are less exposed to hacking attacks.
The fact that hardware wallets are not connected to the internet makes them less susceptible to malicious attacks. However, wallet owners must ensure their recovery phrase is properly stored, as anyone with access to this phrase can unlock the assets.
XRP is compatible with hardware wallets like Ledger Nano S Plus and Ledger Nano X. The Trezor hardware wallet does not currently support XRP.
Currency Exchange Wallets
Currency exchange wallets exist on digital asset trading platforms. Most exchanges supporting XRP trading also provide wallets for storing it.
With a currency exchange wallet, you don’t need to worry about storing and safeguarding recovery phrases—the platform handles this. While this option is convenient, caution is necessary. Exchange wallets are not 100% secure. You should protect your wallet from theft using a strong password and two-factor authentication (2FA).
Note that passwords and 2FA only protect against individual account hacks. If the entire exchange is compromised, these security measures may be ineffective as hackers could access all platform wallets.
Exchange wallets are ideal for storing small amounts of XRP or XRP intended for active trading. Storing large amounts in exchange wallets is generally discouraged.
Mobile or Desktop Wallets
Desktop wallets are applications or programs downloaded from the internet that support cryptocurrency storage through an interface. Desktop or mobile wallets are “hot wallets” that are easily accessible but less secure than hardware wallets.
When choosing a mobile or desktop wallet, exercise caution to avoid downloading fake apps or applications vulnerable to viruses and phishing scams.
One of the best mobile wallets for the entire suite of digital coins and tokens on the XRPL is the XUMM wallet.
Paper Wallets
As the name suggests, you can store your XRP details on paper. With this wallet type, you write the private key details for your XRP token on paper.
While paper wallets offer some security against online attacks, they have significant disadvantages:
- Paper wallets are not durable and can be easily misplaced
- They list the wallet’s private keys and recovery phrases, granting instant access to whoever possesses the paper
- If the paper is lost or stolen, access to the wallet funds may be permanently lost
Staking Ripple (XRP)
You cannot stake XRP tokens in the traditional sense to earn rewards because it is not a Proof of Stake coin. However, several platforms allow you to lend out your XRP assets to earn interest. One such lending and borrowing platform is Nexo.
What You Need to Know About the Future of Ripple (XRP)
The success of the XRP token largely depends on the mass adoption of the Ripple and XRP platform in coming years for cross-border transactions. As DeFi and traditional finance continue to converge, Ripple’s position between these worlds may provide unique opportunities for growth.
Should You Invest in Ripple (XRP)?
Investing in cryptocurrencies isn’t for the faint-hearted, and XRP is no exception. But if after personal research you believe Ripple will gain widespread acceptance as a payment system for financial institutions, then XRP could merit investment consideration.
Risks in Investing in Ripple (XRP)
Ripple (XRP) is a high-risk investment. This means you could lose your entire investment in a worst-case scenario. Only invest money you’re willing to lose should the coin’s value plummet.
FAQ About Ripple (XRP)
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