What is Ripple (XRP)? A Comprehensive Overview

What is Ripple (XRP)? A Comprehensive Overview

In today’s increasingly connected global society, cross-border payments and remittances are mired by outdated processes that struggle to keep up with financial system innovation. 

The lack of communication between payment channels slows down transfer functions while driving up costs. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) was launched in 1973 to provide financial payment services between banks worldwide through a messaging network. However, it does not serve the purpose of clearing or settling transactions, which a third party must perform. SWIFT has been an inefficient payment system for years due to the multiple transaction layers it requires before reaching the final destination.

Blockchain technology helps resolve this inefficiency by allowing faster and cheaper cross-border payments and remittances. Ripple is a distributed ledger technology that may disrupt traditional financial procedures by providing a more efficient, faster, and affordable payment network. 

This article will provide an overview of Ripple, its history, the role of XRP in the Ripple ecosystem, and whether XRP is a good investment. It will also explore the potential impact of Ripple on the financial industry and answer some frequently asked questions.

How Ripple Revolutionizes Cross-Border Payments and Remittances

Ripple, a US-based technology company, developed RippleNet in 2012 to provide banks with a faster, more cost-effective, and streamlined option for conducting cross-border transactions1

RippleNet is a real-time gross settlement system, a currency exchange and remittance network, and the company behind the XRP ledger (XRPL), which facilitates payments through its XRP cryptocurrency.

RippleNet offers an alternative to the SWIFT network by transforming and speeding up cross-border funds transfer through blockchain technology. RippleNet enables an end-to-end transfer process lasting minutes by removing the multiple layers necessary for SWIFT to operate. It also provides transaction transparency and near-instantaneous settlement status.

Initially, RippleNet was broken down into different offerings, including xCurrent, xRapid, and xVia. 

xCurrent is a bank-focused payment system, while xRapid is a liquidity provider through XRP. xVia allows customers to connect and combine the previous two services via its API.

In late 2019, Ripple unified the three different products under the same umbrella offered by RippleNet to consolidate the XRP digital asset into one platform for sending funds.

Ripple uses the interledger standard, a blockchain protocol for payments across different networks connecting the ledgers of two or more banks, thereby removing intermediaries and central control from the system. 

The interledger enables interconnected ledgers to communicate, reducing costs and the lengthy process of existing cross-border transactions.

During the transaction process, funds are locked securely on the participating banks’ ledgers, which act as escrow accounts until the transaction executes or, if specific criteria are unmet, and it fails.

RippleNet will automatically find the fastest way to transfer value between the sender and the recipient banks, and calculate the payment costs. This calculation is done following compliance assessment and account verification checks performed by each bank through existing message types such as SWIFT FIN or ISO 20020, pre-validating the payment and facilitating a smooth transfer.

RippleNet provides several benefits to banks and financial institutions, including:

• Faster transaction times: RippleNet enables cross-border transactions that finalize in minutes, compared to the days or weeks it takes with traditional methods.

• Cost-effectiveness: RippleNet eliminates the need for intermediaries, reducing transaction costs and increasing efficiency.

• Transparency: RippleNet provides real-time transaction tracking, giving banks and financial institutions greater visibility into the status of their transactions.

• Security: RippleNet uses blockchain technology to secure transactions, ensuring that funds are transferred securely.

Overall, RippleNet’s innovative approach to cross-border payments and remittances has the potential to revolutionize how we conduct global transactions, making them faster, more cost-effective, and more transparent.

History of Ripple

Ripple was founded by computer engineers David Schwartz, Jed McCaleb, and Arthur Britto in June 20122. The founders were interested in Bitcoin but wanted to create a more sustainable system for sending value without the mining factor. 

They launched the XRP Ledger and NewCoin, which was later renamed OpenCoin and finally settled on Ripple. Angel investor Chris Larsen joined the company soon after.

Initially, the network included the Ripple Consensus Ledger, The Ripple Transaction Protocol, the Ripple Network, and the XRP cryptocurrency used in the Ripple ledger, which later became the XRP Ledger. All these separate entities now converge in RippleNet, including all products and services facilitating global financial transactions.

In 2014, one of Ripple’s founders, Jed McCaleb, left the company to build a similar network called Stellar (XLM)3. Before leaving the company, he was given 9 billion XRP as a reward for developing and founding the company. He later revealed that, by July 2022, he had sold his XRP holdings4.

After the launch of the XRP Ledger, its developers offered 80 billion tokens to Ripple to build on the ledger5. Ripple ensured it consistently sold XRP over time and used it to increase liquidity and build robust XRP markets.

In 2020, the independent and nonprofit XRPL Foundation was launched to drive the growth and adoption of the decentralized XRP ledger6. The foundation raised $6.5 million to create an XRP Community Fund and improve the XRP Ledger infrastructure. Grants from Ripple-backed web monetization platform Coil, Ripple, and the internet-of-value platform Gatehub helped expand the foundation’s work and serve the growing number of developers and other community members that wanted to build on the XRP Ledger.

The foundation’s work has become an essential component of the whole Ripple ecosystem, granting support for developing a safe and successful XRP Ledger network incorporating developers, public and private enterprises, and social initiatives. It also ensures that its list of trusted validators can create an efficient and dynamic ecosystem with simple governance and code management in an open-source environment in the true spirit of blockchain technology7.

The Ripple Ecosystem and the Role of XRP

While Ripple is a network used by banks to settle cross-border and remittance payments, XRP is a digital asset that provides liquidity when necessary, acting as a bridge between two currencies. 

It is not necessary to use XRP to transact on the Ripple Network, as any currency or asset can be used8. However, XRP can provide liquidity when necessary, acting as a bridge between two currencies.

One of Ripple’s services that use XRP to provide liquidity in cross-border transactions is on-demand liquidity. This solution allows Ripple to partner with remittance players and banking giants like Santander, Bank of America9, and American Express10, removing the need for pre-funded accounts.

XRP serves as an intermediate exchange mechanism between two currencies or networks. By using XRP, Ripple aims to enhance liquidity when necessary, acting as a bridge between two currencies. It facilitates efficient transactions and enhances cross-border financial transactions by banks and financial institutions.

However, the origin and subsequent role of XRP caused some issues with the U.S. Securities and Exchange Commission (SEC). The SEC initiated a lawsuit against Ripple in December 2020 based on allegations that the company and its executives illegally sold XRP to investors without first registering it as a security. Despite a July 2023 ruling that determined that XRP is not a security, the SEC has unfinished legal business with Ripple. It is expected that legal proceedings will continue into 2024 or possibly even 202511.

What is XRP?

XRP is a cryptocurrency token created by Ripple for use on its network to facilitate cross-border payments. It is used as a bridge currency to offer financial institutions a more cost-effective way to exchange both crypto and fiat currencies. XRP is premined, meaning that many of the tokens were created or mined before the project was launched to the public. The company has always assured that the premine solution was necessary to reward the project’s founders, developers, and early investors.

How does XRP work?

Like other cryptocurrencies, Ripple’s blockchain maintains an immutable record of transactions through its electronic ledger, the XRP Ledger (XRPL). The XRPL is responsible for recording transaction data such as balances, accounts, and transfers and is cryptographically secured with key pairs (private and public keys). The private key holders are the only ones who can approve transactions.

XRP transactions settle in seconds, enabling payments in local currency for both parties and allowing institutions to bridge currencies. 

Transactions are confirmed by a network of 150+ validators (servers) that may be rewarded a place in Ripple’s Unique Node List. The Unique Node List includes 36 validators, with Ripple running one of them12. Validators must agree on a set of transactions for a particular ledger entry based on the Ripple Protocol Consensus Algorithm (RPCA). The network is in charge of validating all outstanding XRP transactions, on average, every 3.5 seconds13.

Once validated, the transactions are recorded onto the XRP ledger in compliance with the RPCA and are permanently timestamped on the blockchain to ensure the ledger data entry remains immutable. Consensus is reached when at least 80% of validating nodes agree on the transaction’s legitimacy, and a new block is added to the XRPL blockchain14.

What is XRP used for?

XRP is used to operate the Ripple network as an alternative to SWIFT, offering transaction speed for more efficient international payments and faster cross-border transactions. Ripple’s token is handy for currencies that may require an intermediary medium of exchange to be swapped cheaply. 

That intermediary currency is usually the U.S. dollar, but XRP can replace it for a fraction of the cost per transaction.

Traditional wire transfers may take days to settle and charge high fees. The Ripple network, using XRP for its high transaction speed and low costs, offers a faster and more accessible alternative. 

XRP empowers the open-source XRPL Ledger, a scalable and sustainable blockchain that provides a permanent and immutable record of transactions only authorized by the holder of private keys.

The decentralized exchange (DEX) — the XRPL DEX — is the longest-operating decentralized exchange15, enabling users to trade XRP and other cryptocurrencies since 2012 with minimal fees. The XRP Ledger DEX provides unlimited currency pairs tracked on-demand when users initiate trades. XRPL trades are called “offers,” — a limit order to buy or sell a quantity of one currency (XRP or another token) for a specific amount of another at the best exchange rate available.

Cross-chain bridging solution provider Allbridge integrated support for XRPL in April 202216. It opened new opportunities for Ripple in decentralized finance (DeFi) by linking the platform to the Ethereum Virtual Machine (EVM) and non-EVM compatible chains like Solana, Near Protocol, BNB Chain, and Fantom — among others.

How and where to buy XRP cryptocurrency

XRP can be traded at centralized exchanges, including Binance, Bitfinex, Huobi, Kraken, KuCoin, and OKX. Users can buy and sell XRP using cryptocurrencies, stablecoins, and fiat currency pairings through popular cryptocurrency platforms. Decentralized exchanges like SushiSwap and PancakeSwap also offer XRP trading.

To buy XRP through any of the above exchanges, users must have an account with the chosen platform. They will need to open an account with a cryptocurrency exchange, transfer fiat currency or a cryptocurrency used to purchase XRP, move the funds to the platform’s trading account, set up a market or a limit order to buy XRP, click on “buy” and insert the amount required, wait for the transaction to execute, and move XRP to the platform’s wallet or an external wallet.

How to mine XRP

XRP does not require either proof-of-work (PoW) or proof-of-stake (PoS) mining. Instead, it uses the RPCA system without relying on mining to validate transactions like other cryptocurrencies, such as Bitcoin (BTC). The Ripple protocol verifies transactions and maintains the integrity of the network through a system of trusted validators. If users want to obtain XRP through mining, they must mine other cryptocurrencies like BTC or Dogecoin.

XRP vs. Bitcoin

Bitcoin and XRP are two of the most well-known cryptocurrencies in the market. While Bitcoin seeks to challenge the power of banks and governments, XRP aims to improve the existing financial system by making it more efficient and cheaper. The two cryptocurrencies differ in their governance models, total circulation supply, and security.

Certainly! Here’s the updated table with “Smart Contract Language” replaced by “Total Number of Coins Available”:

FieldXRP (Ripple)BTC (Bitcoin)
Year Launched20122009
Creator(s)Ripple LabsSatoshi Nakamoto
Native CoinXRPBTC
Consensus MechanismRipple Protocol Consensus AlgorithmProof-of-Work (PoW)
Total Number of Coins Available100 billion21 million
Source: Various

Governance Models

Bitcoin is considered decentralized due to its network of distributed and available nodes to anyone who wants to participate in blockchain operations. In contrast, only a list of high-profile validators provides transaction verification and confirmation in the Ripple ecosystem. For this reason, many believe XRP is not decentralized like other cryptocurrencies, especially Bitcoin.

Total Circulation Supply

Bitcoin’s total supply is fixed at 21 million17 and impossible to change, while XRP’s maximum supply is 100 billion18 coins. Bitcoin did not have a premine stage — when Satoshi Nakamoto started mining, anyone else could.


The Bitcoin network has become much more secure than other cryptocurrencies, including XRP, which relies on a small network of selected nodes to validate transactions. However, XRP aims to settle cross-border transactions cost-effectively and quickly, which requires a faster transaction processing time.

In summary, while Bitcoin continues to become a medium of exchange and a store of value, XRP aims to settle cross-border transactions cost-effectively and quickly. 

Is XRP a Good Investment?

Investing in XRP is not a guaranteed safe or profitable investment. However, there are several factors that investors can consider when evaluating whether XRP is a good investment.

One factor to consider is that XRP has yet to enter mainstream use despite its goal of disrupting international payments and remittances. Financial institutions that have shown interest in Ripple and its technology are still testing the network. This lack of widespread adoption could potentially limit the growth of XRP.

XRP’s legal issues with the SEC have also slowed its adoption and recognition as a digital currency.

Another factor to consider is Ripple’s centralization, which makes the network more susceptible to censorship compared to other cryptocurrencies. 

A few entities control the network and can potentially block transactions. However, for investors who prioritize technology efficiency over centralization concerns, XRP could be a worthwhile investment option given its reputation and trust among financial institutions.

Overall, investors should carefully evaluate the risks and benefits of investing in XRP before making any investment decisions.

The Future of Ripple

Ripple has the potential to revolutionize the financial industry by disrupting international payments and remittances. It can replace the existing SWIFT network, providing fast and cheap transactions. Ripple’s policies and measures aim to impact the financial industry for enterprises and financial institutions rather than retail customers.

In 2019, Ripple launched a “Liquidity Hub” for enterprise clients that want to offer crypto trading through access to digital assets from numerous providers, including exchanges, market makers, and over-the-counter (OTC) trading desks. Since then, the company has provided public access to the liquidity hub19 as well as offering aggregated liquidity pools, including exchanges and OTC desks, to get optimized pricing. 

This streamlined digital asset management leverages an enterprise-level dashboard for managing, trading, and reporting to bridge the new world of digital assets with traditional fiat currencies.

As the cryptocurrency market expands its functionality to DeFi, NFTs, and the metaverse, the Ripple ecosystem is working to follow suit, developing projects for NFT issuance, smart contract implementation, and the creation of federated sidechains to facilitate integration with other platforms. 

The company launched a creator fund of $250 million in 2022 to help NFT creators mint their projects onto the XRP Ledger20, demonstrating its commitment to the industry.

With the world’s central banks rapidly approaching the testing and launch of CBDCs, Ripple has positioned itself as an experienced developer of CBDC applications to help drive the implementation and adoption of these new monetary tools. 

Ripple offers a platform for minting, managing, transacting, and destroying CBDCs based on a ledger that uses advanced technology21

This platform enhances Ripples’ reputation as a solution to help banks, financial institutions, and governments manage the transfer of payments.

However, much of Ripple’s adoption and success will depend on the outcome of the SEC’s verdict. It’s still unclear how long the resolution will take. Despite this uncertainty, Ripple’s potential impact on the financial industry cannot be ignored. If it can overcome regulatory hurdles, Ripple has the potential to transform the way we think about cross-border payments and remittances.

Frequently Asked Questions

Who Owns Ripple Labs?

Ripple Labs is a privately held company, and it is not publicly traded. It was founded in 2012 by Chris Larsen and Jed McCaleb. Currently, the CEO of Ripple Labs is Brad Garlinghouse.

How Does Ripple’s XRP Function in the Cryptocurrency Market?

XRP is a cryptocurrency that facilitates cross-border payments. It is used as a bridge currency, allowing users to transfer funds between different currencies quickly and efficiently. Unlike other cryptocurrencies, XRP is not mined, and all the XRP that will ever exist has already been created.

What Factors Influence Ripple’s Price Fluctuations?

Like all cryptocurrencies, Ripple’s price fluctuations are influenced by a variety of factors, including supply and demand, market sentiment, regulatory changes, and overall market conditions. In addition, the actions of large investors and institutional players can have a significant impact on Ripple’s price.

What are the Legal Challenges Faced by Ripple and Its Impact?

Ripple has faced several legal challenges, including lawsuits alleging that XRP is an unregistered security. These lawsuits have impacted Ripple’s reputation and have led to increased scrutiny from regulators. However, Ripple has consistently maintained that XRP is not a security and has worked to address these legal challenges.

Through storytelling and detailed research, Mariquita connects the brightest developer talent and most motivated community members to web3 changemakers. From contributing top-of-funnel educational content for web3 onboarding projects like Surge.io to collaborating with Hedera’s HBAR Foundation on content marketing strategy, Mariquita has worked with some of the top artists, founders and builders in the space.

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