Ripple and the XRP Cryptocurrency: What Is It? How does Ripple operate?

In spite of the extensive history of the project, many people are still unsure of the connection between Ripple and XRP.

Ripple is said to have been in the works for four to five years prior to Bitcoin. An online community's members might use RipplePay, a secure payment method established by Ryan Fugger, a Canadian computer programmer, in 2004-2005.

Since then, XRP and its founder fintech business Ripple have been in existence for six more years.

The SEC has accused Ripple of selling XRP as an unregistered securities in violation of federal law, and the firm is now embroiled in a court struggle to defend its position.

As a result of: When Arthur Britto, Jed McCaleb and David Schwartz originally started working on the XRP blockchain in 2011, they aimed to overcome the problems of cross-border payments and remittances in traditional banking by creating an open source, public blockchain. This trio (together with Chris Larsen, who would go on to become the company's CEO) would go on to form Ripple. The XRP Ledger is the foundation of the decentralized XRP cryptocurrency.

The Ripple transaction protocol, also known as RTXP, was formally announced in 2012, and the firm (previously known as OpenCoin) was rebranded as Ripple Labs in 2013 to distinguish it from the XRP currency. In 2015, the corporation renamed itself Ripple.

Despite the fact that Ripple and XRP are intrinsically linked, they remain different legal companies. Fintech firm Ripple is a centralized corporation that develops worldwide payment solutions and has invented the XRP payment system, which the firm claims is decentralized. When it comes to online payments and currency exchanges, XRP is an autonomous digital asset with a market capitalization of roughly $83 billion.

In spite of this, Ripple's products are still powered by XRP and the XRP public blockchain.

What precisely is Ripple?

The open nature of Bitcoin and Ethereum aims to disrupt traditional finance, whereas Ripple aims to improve the current and fragmented traditional financial system.

This is accomplished through the use of a standardized protocol to connect a global network of independent banks and payment providers and make low-cost, instantaneous payments across borders.

Initial technologies for money transfers between banks were developed by McCaleb and Chris Larsen, who subsequently created a competitor initiative called Stellar with a similar goal in mind.

A liquidity product, xVia, is an application programming interface for payments, while xCurrent is a system for real-time settlement. A new name, RippleNet, was introduced in 2019, replacing the previous names of xCurrent and xVia. On-Demand Liquidity (ODL) is the new name for xRapid, a product that facilitates the movement of fiat currency across nations.

What's the deal with Ripple?

Ripple is made up of two parts: the protocol and the network.

Ripple: Real-time gross settlement network (RTGS), currency exchange, and remittance network are all provided by Ripple as a whole Transactions between financial institutions may be carried out instantly because to the platform's blockchain payment technology and the RippleNet network.

RippleNet: Through the distributed platform of Ripple, users are able to make and receive payments in real time through the RippleNet network of payment facilitators and worldwide institutions.

The Ripple Transaction Protocol (RTXP), like the standardized HTTPS, provides a structure and set of standards for all network participants to follow, eliminating transaction bottlenecks.

The XRP Ledger can be accessed via HTTP or WebSocket APIs. Many programming languages are supported, including Java, Python, and JavaScript.

Many well-known banks and financial organizations serve as trustworthy validators for transactions on the ledger, which may be accessed by anyone who wishes. In March 2022, the network was capable of processing 1,500 transactions per second at a cost of $0.007 per transaction. As compared to the native cryptocurrency of Ethereum and the native cryptocurrency of the Bitcoin network, ether can handle roughly 10 transactions per second while bitcoin can manage between 4 and 5 at a time.


Gateways are points of entry into the Ripple network for persons and organizations who want to join the network from outside. As a trusted middleman, the gateway helps two parties to conduct a transaction. The Ripple network is used to facilitate the movement of fiat and cryptocurrency money.

What's the deal with XRP?

With its federated consensus process instead of the more traditional "proof-of-work" or "proof of stake" procedures, the XRP Ledger's native coin is unique in that its players are recognized and trusted by one another only because of their online reputations. Approximately 36 distinct nodes were on the default node list as of March 2022, when there were more than 150 validators on the network (UNL).

A trusted network participant's list of nodes is called a unique node list. If you're looking for a trusted third-party to validate your transactions, there are three groups to choose from: Ripple, XRP Ledger Foundation and Coil (a Ripple-funded business). These are the standard lists of unique nodes (dUNL). Because not all validators are created equal in terms of trust and performance, members in the network have greater freedom in deciding who they want to add to their UNL.

Traditional ways of sending money internationally (which can take one to four business days to complete) take days or even weeks to complete, while XRP can complete cross-border transactions in milliseconds and for a small fraction of that time and cost.

Some XRP (approximately 10 drops, each worth 0.00001 XRP) is destroyed to pay transaction costs. Even though transferring XRP has a variable cost based on network traffic, the XRP Ledger is used to execute and settle all relevant transactions.

No new XRP coins will ever be generated since, unlike other cryptocurrencies, XRP can't be mined in any way. XRP tokens were released in full by the ledger's creators in 2012, when the ledger was first launched. They sent 80 billion tokens to Ripple to help it grow, and then kept the rest for themselves.

If Ripple decides to sell coins from its pre-mined supply, more XRP will circulate on secondary markets. An escrow account from which the corporation could only sell a maximum of 1 Billion XRP tokens each month, for example, was established by the company in 2017. XRP sales were made more transparent and predictable as a result of this event.

The "undistributed" XRP tokens in escrow make up the rest of the circulating supply. Any tokens that are not sold are returned to the escrow and re-distributed at a later point.

The escrow account holds 46.1 billion XRP tokens as of March 2022. Ripple's website has information on the total amount of XRP it has in its possession and has dispersed.

Pros and cons

Ripple's digital currency, XRP, is more centralized than Bitcoin or Ethereum since no one outside of Ripple can decide when new currencies should be issued, despite the open nature of blockchain's ledger. For the most part, this is because XRP is apparently more of an investment vehicle than a mechanism for moving money across borders via Ripple products, even if it has definitely served as one in the eyes of the SEC.

Controversy occurred in 2020 when the regulator sued Ripple for illegally soliciting $1.38 billion from investors in what the SEC considered as a “unregistered securities offering.”

As of March 2022, the lawsuit was still underway In February 2022, XRP gained 22% when reports suggested that the legal processes for the corporation had taken a good turn.

Here are some advantages of Ripple and XRP:

  • Fast, efficient, and transparent payments with an added liquidity tool to help streamline the settlement process.
  • XRP settlement speed is faster than Bitcoin's or Ethereum's.
  • Ever-improving scalability – the XRP network can handle up to 1,500 transactions per second.
  • The cross-border currency payment system has attracted more than 100 financial institutions including banks to its network.

Here are some of the drawbacks:

  • RippleNet is not wholly decentralized compared with other public blockchains.
  • Because its products are tailored for big financial institutions, there is little practical relevance for retail users, although that hasn’t stopped its rabid fans, known as the XRP Army, from pumping the coin on Twitter.
  • Because a large majority of XRP is held by Ripple, the token's price could be easily manipulated or negatively influenced by saturating the market with large sales.
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